Displaying items by tag: Capacity utilisation
The Ramco Cements to expand Kalavatala cement plant
09 February 2024India: The Ramco Cements plans to more than double the clinker capacity of its Kalavatala cement plant in Andhra Pradesh to 6.3Mt/yr at a cost of US$151m. The new Line 2 will be equipped with a 15MW waste heat recovery (WHR) unit. The line will raise the producer’s installed cement capacity to 26Mt/yr and its clinker capacity to 19Mt/yr with commissioned scheduled by early 2026. The Ramco Cements plans to source the funds through internal accruals and bank borrowings.
At the same time, the company will invest US$18.4m in the construction of a 10MW WHR plant at its Ramasamy Raja Nagar cement plant in Tamil Nadu, scheduled for commissioning by March 2025. Both WHR projects will raise The Ramco Cements’ total WHR capacity by 58% to 68MW.
The Ramco Cements said that Kalavatala plant is currently operating at full capacity utilisation. It added that it decided to expand the plant in response to this and further ‘demand potential.’ In the current, fourth quarter of the 2024 financial year (1 January – 31 March 2024), the company expects to make capital expenditure (capex) investments of US$47m, followed by US$205m in the upcoming 2025 financial year.
India: Ramco Cements reported 5% growth in sales in the third quarter of the 2024 financial year (1 October – 31 December 2023), to US$254m. Rising cement volumes – up by 9.9% to 4Mt – helped to drive the growth in sales. Despite weather-related disruptions, Ramco Cements raised its earnings before interest, depreciation, taxation, and amortisation (EBITDA) rose by 37% to US$48.4m. A 28% reduction in fuel prices to US$138/t of cement spurred earnings growth. Cement capacity utilisation during the quarter fell quarter-on-quarter to 74% to 82% previously.
India: Sagar Cements recorded sales of US$80.5m in the third quarter of the 2024 financial year, up by 16% year-on-year from US$69.3m during the corresponding quarter of the previous financial year. Cement sales volumes rose by 14% year-on-year. The Hindu BusinessLine News has reported that the growth allowed Sagar Cements to reduce its net losses by 57%, to US$1.22m.
Managing director Sreekanth Reddy said “Favourable prices prevailed in our key markets. As far as EBITDA and margins are concerned, we observed a significant enhancement on a per-tonne basis, consistent with our earlier projections.” Reddy added “We anticipate this positive trend to persist in the future, supported in part by higher utilisation levels of recently-acquired units and strategic initiatives aimed at promoting the use of green power, alternative fuels and the deployment of electric trucks and wheel loaders.”
Update on UltraTech Cement, November 2023
01 November 2023UltraTech Cement approved a US$1.5bn capacity expansion plan this week. The initiative intends to add 21.9Mt/yr in production capacity by setting up four new cement plants, four upgrades and four new terminals. It will also add 39MW in waste heat recovery (WHR) units and alternative fuels feeding and handling investments. Commercial production at the new sites is scheduled to start from the 2026 financial year onwards.
The company is India’s largest cement producer by production capacity and the third biggest globally outside of China. Yet it is still growing as this latest announcement shows. Kumar Mangalam Birla, the chair of parent company Aditya Birla Group, revealed the ambition earlier this year, that UltraTech Cement wants to reach a production capacity of 200Mt/yr in the near future. This is likely to be ordinary Portland cement (OPC) capacity from both integrated and grinding plants. It reported a figure of 132Mt/yr in its annual report for the 2023 financial year. This latest capacity investment is its third in recent years. In December 2020 it announced investment of just below US$560m to add 12.8Mt/yr of capacity with commissioning by around the end of the 2023 financial year. It later confirmed that most of this had been completed on schedule. Then another US$1.55bn investment was ordered in June 2022 to add 22.6Mt/yr. This tranche of new plants and terminals is planned to be completed by the end of the 2025 financial year.
Graph 1: UltraTech Cement’s OPC production capacity and utilisation rate, 2017 - 2023 financial years. Source: Company annual reports.
The graph above shows how the company’s capacity has grown since 2017. This is the year in which it acquired 21Mt/yr of capacity from Jaiprakash Associates for US$2.5bn. These plants then show up in the capacity figure for 2018. The next big bump to capacity arrived in 2019 when UltraTech Cement was able to complete its purchase of Century Textiles & Industries, adding another 15Mt/yr of capacity. Since then though it has mainly been newly built plants or upgrades. It is also worth noting the capacity utilisation figures the company has reported. There has generally been an upward trend since 2017 with a dip during the Covid-19 pandemic years in 2020 and 2021. This has also been happening despite adding more capacity through both acquisitions and building new plants. The other point to note is that the cement company is mostly a wholly India-based one. It has presences in the UAE, Bahrain and Sri Lanka but these are small compared to the operations back home. In the 2023 financial year, 23 of its 24 integrated plants were domestic, 25 out of 29 grinding plants were and seven out of eight terminals were too.
UltraTech Cement’s current nearest rival, Adani Group, appeared on the scene in 2022 when it bought Holcim’s subsidiaries in India. The timing may have been coincidental but, after Holcim agreed to sell to Adani Group in May 2022, UltraTech Cement announced its US$1.55bn capacity drive in June 2022. A year later in June 2023 Adani Group targeted a capacity of 140Mt/yr by 2028. To give an idea of the market both of these companies are competing in, Ratings Agency ICRA’s last forecast in September 2024 predicted that cement volumes would grow by 9 - 10% in the 2024 financial year. Capacity expansion by all cement producers was expected to be driven by “steady demand for housing and increased government investments in infrastructure.”
UltraTech Cement may be the fastest expanding cement company in the world at the moment. India certainly needs the cement as its population overtook China’s in April 2023. The Aditya Birla Group company is not taking any chances with its competitors by maintaining its lead in capacity. One risk it may want to watch out for though is India’s nascent Carbon Credit Trading Scheme. Some form of carbon trading for the petrochemicals, steel, cement and paper sectors looks set to start in the second half of the 2020s. However, any such scheme is likely to favour incumbent manufacturers with newer plants. With the country’s net zero target set at 2070, UltraTech Cement has plenty of room to manoeuvre.
Ukraine raises eight-month cement production so far in 2023
20 September 2023Ukraine: Cement companies produced 4.75Mt of cement during the first eight months of 2023, up by 30% year-on-year from eight-month 2022 levels. Interfax-Ukraine News has reported that producers are operating at 60% production capacity.
Liudmyla Kripka, executive director of the Ukrainian cement association, Ukrcement, said “If we compare it with last year, when the country’s economy was in shock from Russia’s treacherous attack on Ukraine and the start of the full-scale war, the situation has improved somewhat. Cement production in the first half of 2023 grew by 26%, and in the first eight months by 30%, compared to last year.” Kripka added “We are still far from the indicators of 2021, but the dynamics are encouraging. Once there was a prospect, work for the future began. Cement producers, even in war conditions, are investing in Ukraine and the economic restoration of the regions. This expands the production capacity of the industry as a whole and contributes to the creation of new jobs.”
South African cement industry’s capacity utilisation drops below 60% in 2023 financial year
18 September 2023South Africa: The cement industry produced 13Mt of cement during the 2023 financial year, which ended on 31 March 2023. This corresponds to a capacity utilisation rate of 59% across its 22Mt/yr installed capacity. The Business Day newspaper has reported that the industry competes in the domestic market against imports that are 40% lower in price.
Tajikistan exports 538,000t of cement in first half of 2023
10 August 2023Tajikistan: Cement producers exported 538,000t of cement during the first half of 2023, down by 20% year-on-year from 676,000t during the first quarter of 2022. Uzbekistan received 342,000t (64%) of Tajikistan's cement exports, while Afghanistan received 194,000t (36%). The Tajik government banned cement exports for five days in July 2023, due to a domestic cement shortage that affected important infrastructure projects. Asia-PLUS News has reported that the government now expects producers to export 1.5Mt of cement throughout 2023. The Tajikistan cement industry is expected to produce 4.5Mt of cement in 2023, corresponding to a capacity utilisation of 80% across its 5.6Mt/yr installed capacity.
India: Aditya Birla subsidiary UltraTech Cement recorded cement sales volumes of 30Mt during the first quarter of the 2024 financial year, which began on 1 April 2023. This corresponds to growth of 20% year-on-year from first-quarter levels in the previous financial year. The Economic Times newspaper has reported that ICICI Securities expects UltraTech Cement's earnings before interest, taxation, depreciation and amortisation (EBITDA) to fall by 3% year-on-year. Declining fuel prices are expected to have contributed to a drop in the producer's costs. Throughout the quarter, its capacity utilisation rate was 90%.
Indonesia: The Indonesian cement industry produced 29.3Mt of cement during the first half of 2023. This corresponds to a utilisation rate of 51% across an installed national capacity of 116Mt/yr. Throughout 2022, the industry produced 64Mt of cement and recorded a utilisation rate of 55%. Local capacity utilisation levels in the first half of 2023 were as low as 45% in some regions. Only Bali-Nusa Tenggara Region and Maluku-Papua Region did not suffer from overcapacity. National demand was 28Mt in the first half of 2023 and 63Mt throughout 2022. Meanwhile, first-half exports rose by 12% year-on-year in opening six months of 2023.
Indonesia Government News has reported that the Ministry of Industry has instigated a moratorium on investments in the construction of new cement capacity. Director general Ignatius Warsito said "These efforts can provide legal certainty for cement industry players in the country, as well as support competitiveness." Warsito noted the health of Indonesia's existing export markets for cement, but noted the uncertainty of the industry's coal supply and its price. Coal currently accounts for 40% of Indonesian cement's fuel consumption by value.
India: UltraTech Cement increased its cement sales volumes by 20% to 30Mt in the first quarter of the 2024 financial year. Press Trust of India News has reported that the producer sold 950,000t of cement outside of India, up by 13% from 840,000t a year earlier.
During the year, UltraTech Cement recorded a capacity utilisation rate of 90% across its 136Mt/yr capacity.