Up and Down the Cement Chain


November 2019
Up and Down the Cement Chain

The data on growth of core sectors have just come in for September and it shows a decline of -5 per cent, the highest degrowth that this index has seen since the inception of new base year of 2012. Among all round decline of various sectors, cement has reported a back to back decline of 2 per cent on top of a 5 per cent shrinkage in August. It was just a couple of months back that the observers were gung ho about recovery in the sector. While the near term fortunes of the cement sector thus fluctuates up and down, we are covering in this issue of Indian Cement Review, a couple of critical inputs and outputs of cement, up and down the value chain.

This time, we have come with a offering of perspectives around concrete and gypsum. One is a downstream value-added product of cement, with which we all are reasonably familiar, since concrete is almost synonymous with construction, while the other is a vital raw material of cement, which by contrast, is lesser known among the lay persons. With this combination, we move up and down the cement value-chain, and investigate the connected emerging issues.

We like the subject of gypsum because the issues around procurement of this commodity are interesting and complex at the same time. Traditionally, cement has been manufactured by co-grinding of clinker with mineral gypsum. Over the last two decades however, the limited amount of mineral deposits of gypsum in India, predominantly in the state of Rajasthan and a little bit in Jammu, have come under pressure due to increased demand as cement consumption grew. Alongside, the other consuming industries of mineral gypsum, such as Gypboards, finishing plaster materials, etc., also hiked their demands. Slowly, deliveries and prices of mineral gypsum came under strain, and quite obviously, our cement companies started looking at imports of mineral gypsum from Bhutan, Thailand, Oman and Saudi Arabia.

As with all imports, such procurement strategies expose a cement plant to the additional risks of fluctuations in currency and freight rates, over and above the usual risks of elongated supply chain uncertainties.

We believe that these factors led the industry to look for synthetic substitutes of mineral gypsum from fertiliser/copper industry. Now, such chemical substitutes were known previously as well, but did not find favour with process engineers due to adjustments needed to be experimented with, in the raw mix and in the process, to arrive at a stable cement quality. As the old saying goes, "necessity is the mother of invention", the difficulties in procuring indigenous mineral gypsum, and the risks associated with importation of foreign mineral gypsum incentivised the cement sector to learn and assimilate the process tweaks necessary to use chemical gypsum available as by products of other chemical/metallurgical industries. This approach gave the cement plants also a small opportunity of cost reduction.

It is this complex interplay of factors of quality, process, cost and availability, that makes for an absorbing discussion on the topic of gypsum.

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