INDIA: October sees cement sales firm up

After a long lull, cement biggies ACC, UltraTech and Ambuja Cements saw their despatches rise in October.

UltraTech, controlled by the Aditya Birla Group, posted a 21.26% jump in despatches at 3.42 million tonne (mt) as production rose 18.16% to 3.47 mt. ACC and Ambuja Cements, both controlled by Holcim, posted an increase of 13.6% and 19.6%, respectively in 

cement despatches.

ACC’s cement despatches increased to 1.92 mt from last year’s 1.69 mtpa and production to 1.98 mt from 1.71 mt last year.

Ambuja Cements saw sales up at 1.75 mt compared with 1.46 mt.

Rupesh Sankhe, research analyst with Angel Broking said, “ACC has done well due to the addition in capacity in its Orissa plant six months back, which has now stabilised. Thus it has seen higher incremental production. Though we expected better despatch figures for this quarter and we are witnessing demand from every vertical. Cement players have also increased their capacity utilisation from 68% in the last quarter to 74% now and they are expected to take it up higher which would mean again full surplus would come in the market.”

For the January-October period, Ambuja’s despatches increased 8.5% to 16.88 mt, whereas UltraTech saw a jump of 6.51% to 22.03 mt.

Another analyst from a domestic brokerage said, “Now that the sales numbers are improving for these big ticket guys, the increase in capacity would mean pressure on prices. There has been three round of price increase which has been accepted by the market positively but if excess supply comes into play then sustaining price levels would become difficult and margins would then come under pressure.”

A report by Pradeep Mahtani and Raashi Chopra of Citi dated October 28 says, “The higher prices may sustain for a while, but with utilisation levels at 70-80% we believe there is near-term downside price risk. We expect prices to remain firm in 3QFY11 but believe a correction is likely next quarter.”