Rising costs of transport, fuel could hit cement demand
Rising costs of road transport and fuel could offset the expected pick up in cement demand in the coming months, Indian cement makers ACC and Ambuja Cements have said.
Demand for cement in India, the world's second-largest producer after China, is expected to rise about 8 per cent during fiscal year 2013, say analysts, after a recent government decision to fasttrack infrastructure projects to revive growth in Asia's third-largest economy.
ACC and Ambuja - both controlled by Swiss group Holcim, the world's second-largest cement producer - along with rivals Jaiprakash Associates and Ultratech Cement - account for about 50 per cent of India's cement market.
ACC said on October 18 that post monsoon it expects that demand for cement will revive and help boost despatches in the months ahead. ACC is also encouraged by some recent positive indications in the national economy.
Sales growth across the sector has been slow this year as a result of sluggish home building and construction.
While average cement prices across India have increased by more than 20 per cent over the last 12 months, contributing to higher profits, a hike of 14 per cent in diesel prices since September will squeeze margins in coming quarters, say analysts.
ACC said that it is keeping rigorous control to mitigate the effect of these inflationary pressures. ACC and Ambuja were among a group of cement makers fined a total of $1.1 billion in June for price-fixing by India's anti-trust body.