All-India cement consumption is expected to grow by 6.5% in FY12E against 4.4% in FY11 and 10.2% in FY10. The dispatches grew 7% during April 2011-January 2012 mainly led by 15% YoY growth during Nov-Jan. The demand picked up during the period mainly on account of low base and increase in offtake from construction activities post monsoon. However, the demand has been subdued during Apr`11-Oct`11 period and grew by just 3.5% YoY as the consumption from the housing and infrastructure segments remained sluggish. The capacity utilisation rate is expected to decline further to 76% in FY12E from 77% in FY11 and 87% in FY10. This is on account of 19 MT additions in effective capacity as against incremental demand of 14 MT during the period,`` said broking firm ICICI Securities, while opining on the sector.

Major cement players have reported an aggregate increase of 12% YoY in cement dispatches in January 2012 mainly on account of a lower base last year and a pick-up in demand during the month post festive season. On an MoM basis also, cement dispatches reported moderate growth of 3.2% due to a pick-up in construction activities across regions. Jaypee outperformed other players with 27% YoY growth in dispatches followed by Shree Cement with 18% YoY. UltraTech and ACC reported YoY growth of 11% and 9%, respectively, in dispatches while Ambuja reported 4.3% YoY growth. JK Lakshmi and Heidelberg Cement reported growth of 7% YoY and 6% YoY, respectively. On an MoM basis, aggregate dispatches increased 5%, due to a pick-up in demand post festive season. Jaypee and J.K cement reported a sequential jump of 13% and 11% in dispatches, respectively.

In January 2011, overall industry dispatches grew 11% YoY due to a low base and marginal recovery in post festive demand. However, dispatches in January 2012 increased by 3.2% on a MoM basis.

All India average cement prices increased Rs 10/bag in January 2012 and stood at Rs 270/bag. Prices in the western, southern and eastern regions have seen an increase of Rs 5-15/ bag during the month while prices in the central regions have seen a stability in prices. According to our discussion with dealers, cement prices are expected to remain at the same levels or may increase in the coming months if demand continues to remain strong.