ALGERIA: TRIPARTITE ET INAUGURATION DE DEUX NOUVELLES CIMENTERIES

Cette journée dans la capitale des Zibans sera d'une importance capitale en cette période de crise car elle vise non seulement à évaluer le Pacte économique et social, mais surtout à étudier les voies et les moyens à mettre en oeuvre pour encourager l'investissement, la création d'entreprises et la diversification de l'économie nationale.

Sellal débarquera ce matin à Biskra. Un programme chargé l'attend dans la capitale des Zibans. Le Premier ministre y présidera les travaux de la tripartite avant d'inspecter aussitôt après la clôture de cette rencontre, plusieurs projets dont deux nouvelles cimenteries d'une capacité de production globale de 3,7 millions de tonnes de ciment/an.

Le déplacement de M. Sellal à Djemoura, sur le site de la future cimenterie Cilas (2,7 millions de tonnes/an), fruit d'un partenariat entre un investisseur privé algérien et l'entreprise française Lafarge Algérie, et à Branis où il visitera un projet de la cimenterie «Biskria» (1 million de tonnes/an), est considéré, dans la wilaya des Zibans, comme un signe fort. 

D'un coût d'investissement de 30 milliards de DA, le projet Cilas devrait aussi entraîner la création de 640 emplois directs et plus de 2400 emplois indirects. Un signe édifiant, estime-t-on, quant à la volonté des pouvoirs publics d'encourager l'investissement privé productif, d'asseoir la stratégie d'autosuffisance dans les matériaux de construction et, partant, de poursuivre la dynamique de réduction de la facture des importations qui pèse sur les finances publiques. Il faut rappeler, dans ce contexte, que la facture d'importation des matériaux de construction (ciment, bois, produits en céramique, fer et acier) s'est établie à 1,7 milliard de dollars sur les huit premiers mois de 2015, contre 2,38 milliards de dollars durant la même période de 2014, soit une baisse de plus de 28,6%. Ajoutées aux cimenteries opérationnelles à travers le pays et dont certaines, comme celle d'Aïn El Kebira (Sétif), sont en cours d'extension, ainsi qu'aux usines projetées pour le court terme telle celle de Dehahna (M'sila) qui produira, dès 2017, une quantité de 2,2 millions de tonnes/an, les unités de Djemoura et de Branis devraient contribuer à atteindre l'objectif d'autosuffisance en ciment et à réaliser des surplus de production qui pourraient être destinés à l'exportation. 

Actuellement, l'Algérie dispose de 14 cimenteries publiques et privées d'une capacité de production globale de près de 19,5 millions t/an alors que la demande est de 24,5 millions t/an, soit un déficit de 5 millions t/an. Cet écart est comblé par les importations dont la facture a coûté 513 millions de dollars en 2014, tandis que sur les huit premiers mois de 2015, elle s'est établie à plus de 326 millions usd (contre 395 millions usd sur la même période de 2014) en dépit d'une hausse des quantités importées à plus de 4,46 millions de tonnes (contre 4,3 millions de tonnes). Le groupe industriel public des ciments d'Algérie (Gica) détient le marché du ciment à hauteur de 59% (11,6 millions t/an) et devra porter sa production à 18,5 millions t/an à fin 2017, alors que les 41% restants du marché du ciment sont couverts par le secteur privé et les importations. Selon les prévisions, au rythme actuel de la croissance continue de la production assurée par les différentes entreprises de fabrication du ciment (Gica, Lafarge Algérie...), le marché algérien devra être autosuffisant en ciment à l'horizon 2016-2017. 

L'inscription des deux nouvelles cimenteries de Biskra au programme de la visite du Premier ministre, autant que la réappropriation récente des actifs d'ArcelorMittal par le partenaire public algérien et la construction du complexe sidérurgique de Bellara, sont perçues comme une réaffirmation de la volonté de l'Algérie de ne plus avoir à concevoir son avenir économique sous le prisme déformant des cours aléatoires du pétrole. Cette journée dans la capitale des Zibans sera d'une importance capitale en cette période de crise car elle vise non seulement à évaluer le Pacte économique et social, mais surtout à étudier les voies et les moyens à mettre en oeuvre pour encourager l'investissement, la création d'entreprises et la diversification de l'économie nationale. Ce déplacement sonnera donc la vraie rentrée qui doit nous montrer la voie pour dépasser la crise...

INDONESIA: Two Indonesia state-owned cement firms to invest $185m in new factory

Two state-owned cement producers, PT Semen Indonesia Tbk (SMGR) and PT Semen Kupang are planning to build a new cement factory in Kupang, East Nusa Tenggara with a total investment of Rp 2.5 trillion ($185.19 million). The new plant will have a capacity of 1.5 million tons annually.

The head of agreement (HoA) of the new cement plant development was signed by the two companies on Thursday. The new cement plant needs 2.5 years to develop after the ground-breaking ceremony commences in 2016.

Corporate Secretary of SMGR, Agung Wiiharto told DEALSTREETASIA, that the plan is part of Semen Indonesia’s strategy to capture eastern Indonesian market.

He said around 40 per cent of the new cement plant output will be exported.

Wiiharto is optimistic that Semen Indonesia will continue to lead the domestic market, even as several foreign companies are preparing to enter Indonesia and building new cement factories in the country.

In 2016, the company expects to have a market share of around 40 per cent.

CEO of Semen Indonesia Suparni, said cement production in Indonesia is estimated to reach 75 million tons in 2016, as compared to this year’s production of 64 million tons. Domestic consumption is predicted to rise by 6 per cent next year, from the current growth of only 1 per cent.

Meanwhile, the Indonesia Cement Association has predicted that the national sales of cement will reach 68 million tons this year.

Agung added that this year Semen Indonesia expects to sell around 28 million tons of cement and will increase its sales to about 29 million tons in 2016 through revamping and de-bottlenecking programs.

In third quarter of 2015, Semen Indonesia sales volume rose 1 per cent to 19 million tons compared to last year, supported by infrastructure and property projects. This year, the state-owned enterprise is expected to keep its net profit growth at around 6 per cent.

Semen Indonesia plans to invest around Rp7 trillion rupiah for developing a new cement mill in Java, Sumatera and Sulawesi Island, with a total capacity 11.5 million tons.

VENEZUELA: Venta supervisada de cemento en Puerto La Cruz

Fiscales de la Cámara Municipal de Puerto La Cruz, realizaron ayer la venta supervisada de cemento en el sector Isla de Cuba de la ciudad porteña atendiendo a las denuncias del pueblo por especulación.

Amarilis Soto, concejal de la Cá- mara Municipal, estuvo a cargo de realizar la venta e informó que el local recibió 288 sacos de cemento, los cuales fueron vendidos de inmediato al público.

Igualmente, Soto informó que realizaron un estudio sobre el porcentaje de ganancia en el que debía ser vendido por lo que explicó que el precio adquirido por los comerciantes era de 70 bolívares y sumándole 20 mil bolívares de gastos en flete queda establecido un margen de ganancia 199.6 % + IVA, motivo por el cual se vendió al precio de bolívares 150 por saco.

Además el proceso de venta se realizó bajo la normativa de no recibir pago en efectivo sino solo con tarjeta de débito"para evitar el bachaqueo?, expresó Soto quien destacó que junto a tres fiscales realizaban la supervisión la cual constaba de llevar un control de los compradores quienes no podían comprar más de tres sacos por persona y solo un integrante de cada familia.

KENYA: Slower growth cements the construction sector

Production of cement, a key material that indicates performance of the construction sector, increased by 9.02 per cent in eight months through August compared to the same period last year.

The Kenya National Bureau of Statistics data shows 4.11 metric tonnes of the building material was manufactured in the period.

This is 340,000 tonnes more than 3.77 tonnes produced in the first eight months of 2014. Thus underlies the slowing performance in the sector that has experienced a double-digit growth in recent years.

Consumption of cement rose by a slower pace of 7.78 per cent [compared to production] over the same period to 3.60 million tonnes from 3.34 tonnes.

The slowdown in the sector is further underscored by the lower value of building plans approved by the Nairobi county government – where development of offices, residences, retail space and warehouses are concentrated.

The county’s data shows it cleared building plans valued at Sh101.75 billion for construction over the eight-month period. This is a quarter or Sh35.06 billion less than the Sh136.81 billion worth of residential and non-residential buildings the county approved in the same period last year.

The data shows that cement manufacturers in August cut their production by 8,877 tonnes to 531,618 tonnes compared to July. Use of the commodity rose by 34,647 tonnes to 455,700 tonnes.

Reduced activities in the sector was one of the major reasons the overall expansion in the economy reduced to 5.5 per cent in the second of this year [April to June] from six per cent last year.

The sector’s growth decelerated to 9.9 per cent over the review period from 16.6 per cent, the KNBS said.

Its performance is mainly being driven by increased expenditure by the government on key infrastructure projects including roads and the 480-kilometre Mombasa-Nairobi standard gauge railway line.

The private sector has also been increasing investment in the real estate sector, targeting largely the mixed-use developments comprising apartments for middle-income earners and shopping malls.

INDONESIA: Cement Association Supports Infrastructure Development

Indonesia Cement Association requested President Joko Widodo (Jokowi) to accelerate infrastructure development in order to boost cement demand. “We expect the infrastructure program to start in February or March, so that next year’s demand could rise 4.6 or even 8 percent,” Head of Indonesia Cement Association Widodo Santoso said after meeting President Jokowi in the palace on Thursday, October 15.

Widodo says infrastructure program has been considered slow in its implementation, whereas the infrastructure development in March may significantly boost cement demands.

In the meeting, the cement industry also mentioned a 2.8 percent increase in cement demand in September. Amid the economic slowdown, said Widodo, the production capacities have reached 78 million tons, while this year’s demand is just 65 million tons. “So the production capacity is 15 percent higher than the demand,” he said. Next year, the demand is expected to reach 71-72 million tons.

Industry Minister Saleh Husin says cement industry remains optimist amid economic condition that has not fully recovered. There will be three new additional factories operating for the remaining year with a production capacity of 7.7 million ton per year. 

“In 2016, there will be several new factories operating with a total production capacity reaching 92 million tons,” said Minister Saleh.

President Jokowi met with the Cement Association accompanied by Industry Minister Saleh Husin.

UZBEKISTAN: Cement Plant should pay tax on excess profit for six years

The Higher Economic Court of Uzbekistan has upheld the penalty tax on excess profit of Ahangarancement JSC (a subsidiary of Russian Eurocement Group JSC) from 2009 to 2014 and penalties for its late payment, the press service of Ahangarancement said.

The Higher Economic Court by its decision reversed the earlier decision of Economic Court of Tashkent region to invalidate the decision of the State Tax Inspectorate of the Ahangaran region to recover excess profits tax and penalties from the factory.

The message said that the decision by the Higher Economic Court was made despite the fact that the calculation of excess profit tax was made by Ahangarancement in accordance with the laws of the country, the correctness of the calculation was confirmed by the ministry of finance and the expert council at the State Tax Committee of the republic.

The press service said that the plant appealed to the Prosecutor General of Uzbekistan to “make a protest to the Supreme Economic Court of the Republic of Uzbekistan to reconsider the decision regarding the case."

“The decision significantly changes the legal practice on issues of the formation of profits of cement companies, significantly encumbers the plant with an additional tax burden, leads to a reduction of investment opportunities of the enterprise, jeopardizing the implementation of the project of modernization of the enterprise,” said the press release.

Tax authorities of Uzbekistan haven’t commented on this situation.

In March 2014, complex unscheduled inspection of financial and economic activity of Ahangarancement JSC started due to the criminal charges against several employees. However, the inspectors did not find large violations in the activity of the plant.

In July 2014, the Economic Court of Uzbekistan`s Tashkent region granted the claim of the Uzbek State Committee for Privatization, Demonopolization and Development of Competition to recognize invalid the contract for the sale of Ahangarancement JSC (Ahangaran city, Tashkent region). Cash in the bank accounts of the enterprise and fixed assets have been seized by court decision.

In late 2014, the Board of Appeals of the Tashkent Regional Economic Court overturned a lower court decision to invalidate the privatization of Ahangarancement JSC, which is controlled by Eurocement Group holding. The decision of the board was taken on the basis of a settlement agreement, which was signed by parties to the litigation.

In August 2006, Russian Eurocement Group holding purchased some 75.5 percent of shares in Ahangarancement JSC. At present, the share of Eurocement Group in the authorized capital of JSC is 83.92 percent.

Ahangarancement JSC is the second largest cement producer in Uzbekistan. The design capacity is 1.736 million tons of cement per year obtained by “wet” method. During the next three years, it is planned to introduce a new line of dry method of production. After its launch, the production capacity of the plant will exceed 4 million tons per year.

In 2014, Ahangarancement increased cement production by 5 percent, compared to 2013 - up to 1.7 million tons, clinker production - by 6.2 percent, up to 1.2 million metric tons. The plant's share in the domestic market of the country is about 30 percent. Products are exported to Kazakhstan, Kyrgyzstan and Turkmenistan.

GHANA: Importation of cement killing local companies

The Ghana Cement Manufacturing Association (GCMA) has expressed dissatisfaction with the manner the Customs Division of the Ghana Revenue Authority (GRA) is handling their recent petition on the under-declared value of the cost of freight (C&F) of imported bagged cement.

Speaking with the media, the chairman of the GCMA, Dr George Dawson-Ahmoah, said cost and freight values (C&F) of $25 per tonne to $30 per tonne were still being charged at the ports on imported bagged cement particularly from China.

He said the association was of the view that any value less than $80 per tonne to cover C&F of imported bagged cement had the tendency to undermine the cost build up of

locally produced cement, making the imported bagged cement far cheaper than locally produced ones.

This, he said made it difficult for the local producers to compete with importers.

Customs unresponsive

Dr Dawson-Ahmoah disclosed that despite several meetings held with the Deputy Commissioner, Operations and the Assistant Commissioner, Intelligence of the Customs Division, it did not appear that the Division would implement the $80 per tonne on C&F.

He said two major companies were still importing into the country with CF value less than $40 per tonne.

“Looking at the cost of bagged cement overseas, together with freight, the importers are doing so much damage to the local manufacturers and this is unacceptable. Customs must come out publicly to declare and resolve this canker to prevent local industries from collapse,” he said.

Dr Dawson-Ahmoah reiterated that the continuous importation of bagged cement was not necessary, stressing that with a current surplus capacity of over two million tonnes per annum, local manufacturing companies had the installed capacity to meet the local demand for cement.

USA: New technique could make cement manufacturing carbon-neutra

Concrete surrounds us in our cities and stretches across the land in a vast network of highways. It’s so ubiquitous that most of us take it for granted, but many aren’t aware that concrete’s key ingredient, ordinary portland cement, is a major producer of greenhouse gases.

Each year, manufacturers produce around 5 billion tons of portland cement — the gray powder that mixes with water to form the “glue” that holds concrete together. That’s nearly three-quarters of a ton for every person on Earth. For every ton of cement produced, the process creates approximately a ton of carbon dioxide, all of which accounts for roughly 7 percent of the world’s carbon dioxide emissions.

And with demand increasing every year — especially in the developing world, which uses much more portland cement than the U.S. does — scientists are determined to lessen the growing environmental impact of portland cement production.

One of those scientists is Gaurav Sant of the California NanoSystems Institute at UCLA, who recently completed research that could eventually lead to methods of cement production that give off no carbon dioxide, the gas that composes 82 percent of greenhouse gases.

Sant, an associate professor of civil and environmental engineering and UCLA’s Edward K. and Linda L. Rice professor of materials science, found that carbon dioxide released during cement manufacture could be captured and reused. The study is published in the journal Industrial and Engineering Chemistry Research.

“The reason we have been able to sustain global development has been our ability to produce portland cement at the volumes we have, and we will need to continue to do so,” Sant said. “But the carbon dioxide released into the atmosphere creates significant environmental stress. So it raises the question of whether we can reuse that carbon dioxide to produce a building material.”

During cement manufacturing, there are two steps responsible for carbon emissions. One is calcination, when limestone, the raw material most used to produce cement, is heated to about 750 degrees Celsius. That process separates limestone into a corrosive, unstable solid — calcium oxide, or lime — and carbon dioxide gas. When lime is combined with water, a process called slaking, it forms a more stable compound called calcium hydroxide.

And the major compound in portland cement is tricalcium silicate, which hardens like stone when it is combined with water. Tricalcium silicate is produced by combining lime with siliceous sand and heating the mixture to 1,500 degrees Celsius.

Of the total carbon dioxide emitted in cement manufacturing, 65 percent is released when the limestone is calcined and 35 percent is given off by the fuel burned to heat the tricalcium silicate compound.

But Sant and his team showed that the carbon dioxide given off during calcination can be captured and recombined with calcium hydroxide to recreate limestone — creating a cycle in which no carbon dioxide is released into the air. In addition, about 50 percent less heat is needed throughout the production cycle, since no additional heat is required to ensure the formation of tricalcium silicate.

Sant said the method is analogous to how limestone cementation occurs in nature, where limestone forms the tough exoskeletons of coral, mollusks and seashells, and when microbes form limestone that cements grains of sand together.

Although scientists had examined this idea previously, Sant said it had never been demonstrated before with a view to carbon dioxide-neutral cement production — and that it actually worked faster than he and his colleagues expected. The cycle took just three hours to complete, compared with the more than 28 days needed for portland cement to react with water to near completion and reach its final hardest consistency.

The successful sample was very small, as required by laboratory conditions. But Sant said now that the process has been proven, it could, in time, be scaled up to production levels.

If cement manufacturers continue to operate as they currently do, and if proposed carbon taxes in the U.S. and other nations are eventually enacted, cement production would be much more expensive than it is now. Were that to happen, a new method for producing cement with little or no environmental impact would be of even greater interest, Sant said.

The study contributes to the goals of UCLA’s Sustainable LA Grand Challenge, a university-wide initiative to transition the Los Angeles region to 100 percent renewable energy local water and enhanced ecosystem health by 2050. Sant is also helping to develop the work plan for Sustainable LA.

The study’s co-authors were Mathieu Bauchy, an assistant professor of civil and environmental engineering, Magdalena Balonis, a research scientist, postdoctoral scholars Kirk Vance and Isabella Pignatelli, and doctoral scholar Gabriel Falzone, all of UCLA.

The research was supported by the National Science Foundation and was conducted in the Laboratory for the Chemistry of Construction Materials in the UCLA Henry Samueli School of Engineering and Applied Science, the Electron Imaging Center for Nanomachines at the California NanoSystems Institute, and the Molecular Instrumentation Center in UCLA’s department of chemistry and biochemistry.

KAZAKHSTAN: Steppe Cement Revenue Falls As Lower Prices Offset Sales Rise

Steppe Cement Ltd Tuesday said revenue in the first nine months of 2015 fell 4% year-on-year as increased sales were offset by lower cement prices.

The cement maker in Kazakhstan said revenue in the third quarter of 2015 experienced a small rise to KZT7.77 billion from KZT7.65 billion a year previously. That brought revenue for the first nine months of 2015 to KZT16.04 billion, down 4% year-on-year from KZT16.77 billion.

That revenue fell in the first nine months as the 4% year-on-year rise in sales volumes to 1.34 million tonnes from 1.29 million tonnes of cement was offset by average sale prices dropping to KZT11,905 per tonne of cement from KZT12,987 per tonne a year earlier.

For the first 9 months of 2015, the cement market in Kazakhstan increased by 14% compared to the corresponding period in 2014, while imports remained unchanged at 13% of the total consumption, said the company.

"Steppe Cement revises upwards its estimate of the cement market for 2015 to 9.5 million tonnes, with Steppe Cement's market share at 18%," it said.

An Alliance News calculation based on those figures shows that Steppe Cement's market share means it will sell just over 1.7 million tonnes in 2015.

Steppe shares were untraded on Tuesday morning at 17.50 pence.

Tanzania: Paradox in Cement Industry Seen

The country's cement industry is seen to be facing a paradox as supply reportedly exceeds demands while per capita consumption is among the lowest globally.

Industrial experts have it that the sector facing production over capacity and is heading to precarious situation when demand does not expand. However, the encouraging news is that the market is there as out of population of 47 million in Tanzania only 4.5 million are cement consumers, according to the Lafarge Tanzania Chief Executive Officer, Ms Catherine Langreney.

She said in Dar es Salaam yesterday that what needed is to create more demand as consumption 'per capita is still low' The CEO said the industry is in more danger today than previous as more players are coming in.

The country's consumption is merely at 80 kilograms per person which is very low compared to other economies in the world. In Kenya, for instance, is 120kg while in developing world goes up to 500kg per person.

Experts said the low per capita has positive correlation with GDP growth, since the higher GDP pushes up cement consumption as well. The over capacity has positive effect as cement prices in the market have started to go down in recent days from 17,000/- per 50kg bag of mid 2,000's to between 12,000/- and 13,000/-. The negative impact is risks for job loss and factory close down.

The country had three cement firms up to five years ago, with installed capacity of 4.65 million tonnes annually, but to date there are eight producers.

The eighth to come onboard, Nigeria's Dangote Cement, which went to production, last week push production capacity to over 6.0 million tonnes annually. The good news in cement industry recently are said to have impact on the two listed companies at Dar es Salaam Stock Exchange (DSE).

The two giant manufacturers--Tanzania Portland Cement Company (Twiga Cement) and Tanga Cement Company (Simba Cement)--shares plunged at the time when number of new firms set plants. On the DSE cement manufacturers share prices have depreciated by between 16 and 20 per cent since the beginning of this year.

Twiga cement went down by 16.25 per cent to 3,350/- a share while Simba Cement depreciated by 20 per cent to 3,400/-as of last Friday.

Brokers have it that the cement's firms share drop is seen as the results of shareholders unwilling to invest more on the sector fearing dividends drop as many players are coming up.

Tanzania Portland Cement Company (Twiga Cement) last year increased capacity by 700,000 metric tonnes- production line. While Lafarge Holcim, Mbeya cement, said yesterday will commission 700,000 metric tonnes vertical mill at the end of this month. Though the industry is blossoming, at the same time, cheap imports from the Middle East countries have continued to enter Tanzanian markets.

These cheap imports, said Ms Langreney, are creating unfair competition as they benefit from widespread acts of tax evasion through under declaration of prices and volumes delivered into local markets.

Recently Manufactures said through Tanzania Chapter of East African Cement Producers Association (EACPA) that they are now facing collapse due to the continued influx of cheap imported products in an already saturated market.

They urged that their situation was being made worse because, they were competing with cheap imports at a time when their margins are squeezed by overcapacity in the market.

The industry last year grew by 7.8 per cent, representing 8.6 per cent of GDP with effect across various construction aspects ranging from individual housing, transportation to mega structures.

MOZAMBIQUE: Mozambique firm to export cement to neighbouring countries

Cimentos da Beira, the latest cement producer in Mozambique, plans to export some of its cement production to neighbouring countries such as Zimbabwe and Malawi, in addition to supplying the domestic market.

State media reported that the plant, with an annual installed cement production capacity of 800,000 tonnes, is expected to start operating later this month after testing the substation that will supply electricity to start production of normal and specific concrete.

Cited by the Mozambican daily newspaper Notícias, the Managing Director of the company, Wouter Trollip, said the plant already has over 40,000 tons of clinker in stock in order to start cement production as soon as the power supply is guaranteed.

With British and South African investment of about US$45 million through the company’s London-based Ambrian plc, Cimentos da Beira employs 70 workers and guarantees it has followed internationally accepted standards of filters with high dust reducing capacity.

Sofala province now has three cement plants, notably Cimentos de Moçambique, which has been operating for many years with Portuguese investment and the recent Austral Ciment, an Austrian investment, both located in Dondo.

INDIA: Foreign brokerages turn positive on large-cap cement stocks

Some foreign brokerages have started favouring select large-cap cement companies due to better pricing power of the sector and attractive valuation. Nomura finds the risk-reward favourable in the large-cap cement space as stocks in this segment are trading at a discount or at par with the average trading multiple (since 2011).

Except UltraTech Cement, Ambuja and ACC, large-cap cement sector stocks have unperformed the BSE Sensex in the last two years. In contrast, mid-cap cement stocks, such as India Cements, Shree Cements, Prism Cements, The Ramco Cements and Heidelberg Cement India has significantly outperformed the benchmark in the said period.

UBS has initiated coverage on UltraTech and ACC with ‘buy’ ratings and sees an upside potential of 17-19 per cent. It has a neutral rating on Ambuja Cements.

Demand is expected to improve with rising government spending on infrastructure. Nomura pointed out that cement volume growth should improve as government spending on roads and railways accelerates.

Improving pricing power

On the other hand, supply is not set to come up soon with limited incremental capacity additions made by players on account of the slowdown. Further sharp fall in input costs (coal and diesel) will provide a tailwind to earnings. All this will lead to improving pricing power and better margin profile.

UBS estimates strong cash flows in the coming years as it expects a compounded annual growth rate of 22 per cent in operating profit between FY15 and FY17, compared with a decline witnessed during FY12-15. However, UBS has cautioned that an improvement in realisations could lag as utilisation rates would need to move beyond 70 per cent. Nevertheless, it has a positive view on the sector.

But weak Q2 likely

In the medium-term, cement companies’ fortunes will continue to be dismal due to the double whammy of absence of capex and lacklustre monsoons. According to Reliance Securities, profitability will be hurt in Q2FY16 due to subdued demand growth, pricing pressure and low utilisation. Motilal Oswal pointed out that re-rating of the sector depends on the second half.