28-05-2013, 11:50 AM
Cement Industry in India: Trade Perspectives
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Introduction
Cement is the glue that holds the concrete together, and is therefore critical for
meeting society's needs of housing and basic infrastructure such as bridges,
roads, water treatment facilities, schools and hospitals. Concrete is the second1
most consumed material after water, with nearly three tonnes used annually for
each person on the planet.
Being one of the basic elements for setting up strong and healthy infrastructure,
Cement plays a crucial role in economic development of any country. Having
more than a hundred and fifty years history, it has been used extensively in
construction of anything, from a small building to a mammoth multi purpose
project.
The manufacturing process of cement consists of mixing, drying and grinding of
limestone, clay and silica into a composite mass. The mixture is then heated and
burnt in a pre-heater and kiln to be cooled in an air-cooling system to form
clinker, which is the semi-finished form. This clinker is cooled by air and
subsequently ground with gypsum to form cement.
There are three types of processes to form cement - the wet, semi-dry and dry
processes. In the wet/semi-dry process, raw material is produced by mixing
limestone and water (called slurry) and blending it with soft clay. In the dry
process technology, crushed limestone and raw materials are ground and mixed
together without the addition of water.
Global Consumption
The demand for cement is a derived demand, as it depends on industrial activity,
real estate, and construction activity. Since growth is taking place all over the
world, in these sectors, the global consumption is also increasing. During the
period from 2006 to 2008, total cement consumption grew from 2,568 million
tonnes to 2,8572 million tonnes, at a Compounded Annual Growth Rate (CAGR)
of close to 7%.
The rapid increase in global cement consumption is led by increasing demand for
infrastructure in emerging economies, with Asia accounting for 66% of the global
demand. China was the world’s largest consumer of cement in 2008 and
accounted for 48.73% of total cement consumption.
Studies4 have shown that there is a direct linkage between cement consumption
and global macro-economic growth and contraction. This was also evident during
the oil shock of early 1970’s and 1979-80 and also during the East Asian crisis in
late 1990s, when the world cement consumption witnessed a sharp decline. At
the opposite end of the spectrum, the relatively healthy growth in many
economies, in recent years has helped spur cement consumption.
Global Production
Cement is produced in 156 countries across the Globe. During 2008, the global
production capacity of cement stood at around 2,872 million tonnes with China
accounting for approximately 1,400 million tones and India a distant second with
total production of 183 million tonnes. The production of Cement is highly skewed
with top ten countries together accounting for close to 70% of total cement
production. These countries account for close to 70% of total population.
Trade situation in emerging markets
The global cement industry has undergone a period of significant change over
the past decade, driven by the demands of a globalised economy. While the
traditional markets of Europe and the US continue to grow, primarily led by public
sector investment, the most significant developments are however to be found in
the emerging economies. They have, in recent years become the most significant
players in the cement market, in terms of consumption, growth and investment.
In emerging economies from Asia to Eastern Europe, cement has become the
glue of progress. Some 80% of cement is made in and used by emerging
economies; China alone makes and uses around 50% of global output.