Transforming the industry

Cement demand is showing a consistent growth in the current market scenario, with continuous construction activities. The industry is moving towards more sustainable practices to meet the stringent environment regulations and net zero goals. Construction Times explores the trends.

The growing construction activities have pushed the demand of cement in the country in the recent years. As the basic binding material extensively used in construction and engineering applications, cement plays a pivotal role in creating concrete. The rising government initiatives and investments in infrastructure projects and the growing real estate sector has driven the demand for cement consumption considerably. Positive trends in real estate can lead to increased construction activities, leading to higher demand for cement. New projects in infrastructure projects will drive demand for cement and concrete in bulk.

Market trends

India remains the fastest-growing economy in the world, and as India grows, cement sector being a proxy, will continue to flourish. The Indian construction industry is expected to register a CAGR of more than 10% during 2022-2027, while also contributing approximately 13% to our country’s GDP by 2025. The growing construction industry largely benefits from the rising urbanisation, road and infrastructure development. Being the key construction material, cement plays a crucial role in infrastructure and real estate construction projects. With the construction industry is growing leaps and bounds, it is imperative for the cement industry to be efficient and productive in cement manufacturing.

India’s cement industry is expected to add ~80 million tons capacity by 2025. Fitch Ratings and CareEdge Research indicate a robust growth trajectory, projecting 6-8 per cent increase in cement demand in India in the fiscal 2024.  The financial year 2023 witnessed a substantial double-digit growth in demand, signalling a positive momentum. Cement production in India is poised to witness a significant 7-9% expansion, primarily fuelled by strategic investments in overall infrastructure and large-scale residential projects.

India is the world's second-largest cement producer after China. It has 8 per cent of the global installed capacity in cement production. The market size of the India's cement industry was 3,644.5 million tons in 2022. The industry hopes to reach 4,832.6 million tonnes by 2028 at a compound annual growth rate (CAGR) of 4.94 per cent during 2023-2028. The per capita consumption at present of 310 kg is expected to increase 434 kg by 2030. 

Sustainability initiatives

The cement industry is particularly energy-intensive industry. It is responsible for around 6 to 8% of global CO₂ emissions, and almost a quarter of all CO₂ emissions caused by the industrial sector all across the world. For this reason, there is a necessity for the sector to reduce its carbon emissions, and the number of legal and environmental restrictions are growing.

Cement production is highly energy-intensive, and the Indian cement sector has made significant progress in improving energy efficiency over the past two decades. The industry has transitioned from the wet process to the dry process for cement production. It is now utilising renewable energy sources, waste heat recovery systems (WHRS), and captive power plants (CPP). Additionally, they are co-processing waste as an alternative fuel. The industry’s path towards Net Zero is complex, technically challenging and needs financial support.

Satish Chander, Chief Manufacturing Officer, Shree Cement, elaborates, “Shree Cement leads in sustainability initiatives, with a strong focus on energy efficiency and reducing its carbon footprint. Currently, it has around 520 MW of green power capacity, spanning Waste Heat Recovery Systems (WHRS), solar and wind sources. As of FY24, green power makes up 55.9% of Shree Cement’s energy consumption, placing it among industry leaders in renewable energy adoption.

Tech Transformations

As the cement industry is aiming a high in production in the coming years, it is imperative for the cement players to adopt new innovative technologies that will enhance production and at the same time, improve efficiency and sustainability in cement industry.

As such, the Indian cement sector is undergoing transformative changes, emphasizing product innovation and sustainable practices. A notable focus is on energy efficiency, with advancements in preheater cyclones and calciners aimed at reducing thermal energy consumption. The industry is swiftly transitioning to blended cements to significantly cut CO₂ emissions. Ongoing modernization of existing plants further enhances operational efficiency and minimizes the carbon footprint.

The major growth driver of cement is the use of concrete in construction projects. With many projects are running now and many in the pipeline, there is a huge demand for concrete for the construction of these projects. As sustainability plays an increasingly important role in the coming time, the focus will be on environment-friendly concrete and concrete technologies. In this scenario, precast technology plays a key role in construction projects. The growth momentum of precast technologies in India is accelerating as the country prioritizes infrastructure development to meet urbanization demands. “Precast solutions are gaining widespread adoption due to their ability to reduce construction timelines, improve quality, and enhance safety. Sectors such as residential housing, commercial complexes, metro rail, and highway projects are increasingly leveraging precast technologies to address scalability and efficiency challenges,” says Krishan Mohan Sharma, Head of India Operations, Vollert India.

Market outlook

The overall market looks positive in the year ahead with a lot of construction activities in the pipeline. Dharmender Tuteja, Chief Financial Officer, Dalmia Bharat Limited, shares his outlook, “While the industry's long-term prospects are promising, there have been some short-term blips as the demand in H1 FY25 has been quite muted due to elections and above average rainfall. Based on analyst estimates, while H1 growth in the cement sector is expected to be ~2-3%, H2 is expected to see a good bounce back and could grow around 8% Y-o-Y with a full year growth of around 6% on the back of pick up in construction activities, government spending towards infrastructure projects, pent-up demand, and sustained demand from the housing segment. In the current year, cement prices have been under pressure due to muted demand growth and higher competitive intensity. This has accentuated the cost reduction pressure on all industry players. In medium to long term, I expect cement demand to grow around 8~9% p.a. As noticed in past also, the larger players will grow faster than the industry growth.”

Talking about the company’s future plans, he concludes, “To cater to growing cement demand, we are steadfast in our expansion journey, aiming to enhance our capacity from 46.6 million tons currently to 49.5 million tons by the end of FY’25 and further to 75 million tons by FY’28."