- 1 Definition / Scope
- 2 Market Overview
- 3 Key Metrics
- 4 Top Market Opportunities
- 5 Market Drivers
- 6 Industry Challenges
- 7 Technology Trends
- 8 Pricing Trends
- 9 Regulatory Trends
- 10 Other Key Market Trends
- 11 Market Size and Forecast
- 12 Market Outlook
- 13 Competitive Landscape
- 14 Key Market Players
- 15 Strategic Conclusion
- 16 Further Reading
- 17 Appendix
Definition / Scope
Cement industry is one of the leading sectors of building materials industry. Cement is used in the production of concrete, mortars, and in the petroleum and other industries.
The different types of cement are Ordinary Portland Cement, White Cement, Rapid Hardening Cement, Coloured Cement, Expansive Cement, Hydrographic Cement, Low Heat Cement, Quick Setting Cement, and others.
- India is the second largest cement producer and consumer in the world. The cement production capacity stood at 502 million tonnes per year (mtpa) in 2018.
- The Indian cement industry is involved in production of several types of cements such as Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), Oil Well Cement, White Cement, Rapid Hardening Portland Cement, etc.
- The cement industry is dominated by the private players, accounting for 98 per cent of the total capacity.
- Over 350 mini cements plants have an expected production capacity of approximately 11.10 million tonnes while 210 large cement plants have total installed capacity of nearly 410 million tonnes.
- The cement plants are largely concentrated in south and west. 77 out of the total 210 large cement plants in India are situated in the states of Andhra Pradesh, Tamil Nadu and Rajasthan.
- The industry is fuelled by the government spending on smart cities and urban infrastructure.
|Base Year||2018||Researched through internet|
Top Market Opportunities
Various factors are impacting the growth of cement industry such as rising demand from construction and infrastructure sector but most importantly, the government of India is taking steps to develop 98 smart cities, which is the major driving factor for the growth of cement industry in India. Other government initiatives towards cement industry such as increased budget allocation for infrastructure development, improving housing segment and various investment schemes for private players such as auctioning limestone block are further attracting the investments and positively impacting the cement industry. Between 2000 and 2017 the flow of investment through FDI has reached to USD 5.25 billion. Also JK Cement has planned to increase its capacity by 2022 by adding 8 million tons per annum.
- Under Union Budget 2018-19, US$ 92.22 billion has been allocated to infrastructure projects. This amount was only US$ 76.31 billion in 2017-18. US$ 31.81 billion will be invested in the smart cities mission. As of August 2018, 22 metro rail projects are under construction.
- The government’s focus on housing for all by 2022 is going to drive the demand for cement. Under Pradhan Mantri Awas Yojana - Gramin, an outlay of US$ 5.097 billion has been proposed for building 4.9 million houses.
- India is expected to become the main exporter of clinker and gray cement to the Middle East, Africa and other developing countries in the next 10 years.
- There are opportunities in areas such as infrastructure projects, ports, housing and freight corridors.
Housing and Real Estate
The real estate market in India is projected to reach from US$ 120 billion in 2017 to US$ 1 trillion by 2023. The government initiative like Housing for all is going to push the demand for cement up. There has been five fold increase in Pradhan Mantri Awas Yojana - Urban to US$ 4.5 billion. This is expected to regain urban housing demand, which represents 30 per cent of the cement demand. Further, rapid growth in rural housing and low-cost housing is going to increase the cement demand.
The Government of India is spending large amount on infrastructure projects. The projects like Dedicated Freight Corridors and ports are under development. Besides, metro rail projects are already on-going in most cities. The GOI is also aiming to build 100 smart cities. Infrastructure development outlays for highways, roads and railways has increased by 11 per cent and 22 per cent respectively. This sector is estimated to account for 20 per cent of the cement demand.
The strong economic growth in India will lead to growth of the industrial sector which will further increase the demand of the cement in the long run. India's economy grew at the rate of 8.2 per cent in the first quarter of 2018-19.
- The cement industry has negative impact on human health and environment. When manufacturing Portland cement, the limestone materials is heated in a huge furnace with high temperature. This result for 60 per cent of the CO2 emission and greenhouse gases. The cement manufacturing process produces millions of tons of waste products cement kiln dust leading to respiratory and pollution health risks.
- Ministry of Environment and Forest has categorized the Indian cement industry under the “Red” category which represents highly polluting industries. Red category industries are obliged to take actions to limit emission of pollution. Further, red categories industries are not permitted in the ecologically fragile areas or protected areas.
- Cement is a freight intensive industry and transporting it over long distances can be uneconomical. The cement industry is heavily dependent on road transport for movement of clinker to cement and the cost of transportation has been increased by almost 50 per cent over the last 10 years.
- Despite being the second largest cement producer, the per capita consumption of cement remains substantially low at 200 kg when compared with world average which stands at 500 kg.
- The utilization is below 70 per cent in the cement industry due to capacity additions and absence of significant demand growth.
- Around 93 per cent of the total capacity is based on the modern dry process, which is considered as more environment friendly. The rest 7 per cent uses old wet and semi-dry process technology. In dry process technology, the air suspension pre heater are fitted with pre-calcinators which makes sure of complete calcining of raw mix before entering the kiln. Consequently, the thermal energy consumption if lessen in dry process as compared to wet and semi dry technology.
- The ball mills has been replaced by vertical roller mills for grinding of raw materials and coals. The vertical roller mills draws 20 to 30 per cent less electrical energy as opposed to balls mills and also these mills are able to accept large feed size.
- The precalciner technology has not only enabled the utilization of high ash coals with low calorific value but also increased the production from the kiln by 2.5 times. This technology has helped in exploiting the economies of scale advantage.
- The cement plants are integrating the modern way of manufacturing cement by using Computer Aided in mining and material handling. The software called PoLogCem, is used in cement industry to scan the pollution activity and find logical solutions with the purpose of pollution control.
- The conventional rope shovels in quarries are being replaced by hydraulic excavators and large wheel loaders.
The cement prices have grown at 7-8 per cent pa over the last decade. The current average price of about US$ 4.32 to US$ 4.68 per 50 kg bag of cement is expected to reach US$ 5.8 by 2020. However, the over capacity and large number of players may lead to lower margins. The prices of different brands in the same segment remains more or less similar with meager difference of just US$ 0.03 - US$ 0.07. per bag.
- The Government of India declared setting up of an Affordable Housing Fund of US$ 3.86 billion under the National Housing Bank. This will be used for easing credit to homebuyers.
- Under Union Budget 2018-19, US$ 92.22 billion has been allocated for infrastructure development. This budget was only 76.31 billion in 2017-18.
- Under Pradhan Mantri Awas Yojana, - Gramin in Union Budget 2018-19, an outlay of US$ 5.097 billion has been proposed for building 4.9 million houses.
- The GOI has auctioned 23 limestone blocks as of October 2018 and this number is expected to increase by March 2019.
- The Central Pollution Control Board issued direction to install online stack continuous emissions monitoring systems to all industries that falls under red category which includes cement industries as well.
- The Cement Industry in India must comply with the following laws:
Water Prevention and Control of Pollution Act, 1974
Water Prevention and Control of Pollution Cess Act, 1977
Air Prevention and Control of Pollution Act, 1981
Environment Protection Act, 1986
Hazardous Waste, 2008
The Forest Act, 1980
The Factories Act, 1948
The Mines Act, 1952
Other Key Market Trends
- The top export destination for Indian cement in FY18 were Nepal, Sri Lanka, USA, Maldives and UK.
- The top five import sources for cement in FY18 were Pakistan, Bangladesh, Japan, Vietnam and Thailand.
- The cement industry witnessed FDI worth US$ 5.26 billion between April 2000 and June 2018.
- India has joined hand with Switzerland to reduce energy consumption and develop newer methods for more efficient cement production.
- The key market in each of the geographical regions with installed capacity are as below:
North - Punjab, Haryana, Rajasthan (85.6 MTPA)
Central - Uttar Pradesh, Madhya Pradesh (52.8 MTPA)
East - West Bengal, Chhattisgarh, Odisha, Jharkhand (49.4 MTPA)
South - Tamil Nadu, Andhra Pradesh, Karnataka (132.7 MTPA)
West - Gujarat, Maharashtra (57.6 MTPA)
Market Size and Forecast
- As of 2018, the cement production capacity stands at 502 MTPA.
- The industry is expected to grow at 5-6 per cent CAGR between FY17 - FY20.
- The cement production reached 190.86 million tonnes between April- October 2018.
- The export of cement and clinker increased at a CAGR OF 10.37 per cent during FY12-FY18 to touch US$ 433.87 million. During the same period, the import of cement increased at a CAGR of 11.14 per cent to US$ 174.36 million in FY18.
- The cement production is expected to grow to 316 million tonnes in 2018-19.
- The cement demand is projected to grow by 7-8 per cent in FY19.
- The cement industry is expected to reach 550-600 million tonnes per annum by the year 2025.
The cement industry in India is dominated by around 20 companies, which accounts for nearly 70 per cent of the total cement production. The remaining share is accounted by four hundred small plants. A total of two hundred large cement plants accounts for a total installed capacity of over four hundred million tonnes. The seventy seven large cement plants are located in the states of Tamil Nadu, Rajasthan and Andhra Pradesh. The industry is a lot more consolidated today than a few years back with few large companies controlling substantial market share.
Key Market Players
Ultra Tech Cement
It is the largest manufacturer of ready mix-concrete in India and is engaged in the business of cement and cement related products. The company manufactures Ordinary Portland Cement, Portland Pozzolana Cement, Portland Blast Furnace, white cement and white cement based products. The company has installed capacity of 96.5 million tonnes per annum (mtpa).
Shree Cement Limited
The company’s main products include cement and clinker. The company ranks third in terms of cement capacity, with capacity of 37.9 million tonnes. The company’s brands include Bangur, Rockstrong and Shree JungRodhak.
The company is most trusted brand in Indian cement industry with five integrated cement manufacturing plants. The company has a range of products for the business to business and retail markets.
The other major players of the market are ACC, Binani Cement, Ramco Cement, OCL India, Birla Corp, JK Cement, India Cement, Prism Cement, Dalmia Cement and others.
The government initiatives like Housing for all, Smart Cities Mission, Amrut, infrastructure development is going to boost the cement demand in India. The cement industry is a vital part of India economy, creating employment to more than a million people. The sector has become successful in attracting huge investments from foreign players. The cement industry is likely to largely benefit from the potential of India in infrastructure and construction sector.
- CAGR - Compound Annual Growth Rate
- FDI - Foreign Direct Investment
- FY - Fiscal Year
- GOI - Government of India
- MTPA - Million Tonnes Per Annum
- US - United States