India Cements Expects Pricing Power To Return By January
Pricing power is expected to return to cementmakers by January on the back of the government’s aggressive push for infrastructure development.
After three to four years of slow growth, India’s cement sector has seen a “sharp uptick” in demand over the last six to nine months, particularly from infrastructure and private housing. That, coupled with capacity nearing its peak, will allow free pricing in the market, said N Srinivasan, vice-chairman and managing director of India Cements Ltd.
“There was a time from 2005 to 2009 where you had extremely good demand and free pricing,” Srinivasan said. “We might be at the threshold of that, next year may be the year when you will see very strong pricing also.”
The country’s construction sector grew at 8.7 percent in the quarter ended June, compared to 1.8 percent last year, showing the sudden rise in demand and activity.
India Cements is operating at 80 percent of its capacity and will reach full utilisation by January. Even if a few companies manage to add capacity over the next 12 months, it won’t make a difference to the pricing power given the extent of demand, Srinivasan said.
All I know is they’re [infrastructure projects] just gobbling cement. Take Telengana, they have the Kaleshwaram dam. The orders placed with the cement companies is not for a specific quantity. They say supply whatever you can.N Srinivasan, Vice-Chairman And Managing Director, India Cements