Know Your Cement
Cement serves the purpose of a binder, a substance widely used in construction that sets and hardens and can bind other materials together in it. Manufactured strictly with precise processes it is very fine mineral powder. Mixed with water, this powder transforms into a paste known for its binding properties which gets harder when submerged in water. Cement has different properties depending upon its makeup. This is because not only the composition of cement but also the fineness may potentially vary.
Cement is usually grey but also found in white, which is usually more expensive than grey cement.
Cement is an organic material obtained by mixing together materials such as limestone, sand, clays and iron ores; burning them at a clinker temperature and grinding the resulting clinker. It develops strength by chemical reaction with water by formation of hydrates.
Hydrate products shape the binding component that binds together building blocks of concrete: gravels. Cement and supplementary cementing materials (SCMs) are the vital ingredients that lock sand and gravel together into an inert concrete matrix. They usually represent 10% to 15% of a concrete mix. So cement quality largely affects the strength and durability of the overall concrete itself. Hence, various properties of cement need to be checked before approving it for a project.
Bricklayer Joseph Aspdin of Leeds, England was the first to make Portland Cement early in the 19th century by burning powdered limestone and clay on his kitchen stove. With this basic method, he laid the foundation for an industry that annually processes a great deal of limestone, clay, cement rock, and other materials into a powder so fine that it passes through a sieve capable of holding water.
The very first dwelling, the solid-rock caves were used as a home in the ancient age. Since then civilisation has started to build, create and construct. To construct and bind two different elements, two different stones, a material was needed. Assyrians and Babylonians used a fine mesh of soil, mud and moulded it into clay.
Discovery of gypsum mortars by the Egyptians created an architectural revolution but gypsum would not work once the humidity increased. Strength, viscosity and setting time were still an issue. The Romans, later on, started using a combination of gypsum and lime to create structures with remarkable durability. The foundation was formed using concrete.
The volcanic soil of Pozzuoli led to the creation of Pozzolana cement. It had material that would blend, bind and set-in. In 1817, Louis Vicat started to explore how optimum proportions of limestone and silica would create a hydraulic binder-like substance that would be christened Cement.
Portland Pozzolona Cement: PPC is manufactured by synchronizing two-stage hydration process involving clinker and pozzolanic material, resulting in a dense, gel-like formation. The use of high-quality ash as a supplementary cementitious material in the manufacturing of PPC results not only in more durable and highperformance concrete, but also in lower energy consumption and greenhouse gas emissions. PPC’s lower permeability and lesser chemical reactivity leads to better performance as compared to OPC. PPC is widely used in mass concrete works such as dams, spillways, retaining walls, all types of reinforced cement concrete (“RCC”) work, underground structures, bridges, general building works and hydro-power stations.
Portland Slag Cement: PSC is created with a combination of slag with clinker and gypsum. It is made by integrating clinker with superior granulated blast furnace slag that leads to granular consistency and creates a cement that is resistant to chemical ingress. PSC is widely used in all types of residential, commercial and industrial projects, dams and other mass concrete works, water retaining structures, concrete roads and flyovers, and underground concrete. Ordinary Portland Cement: OPC is made of ordinary clinker mixed with gypsum, and is graded on the basis of its strength. Based on the compressive strength, OPC may further be classified as 43 Grade OPC and 53 Grade OPC.
Global cement production has been growing at a cumulative annual growth rate of approximately 2% for the last five years and was at approximately 4.2 billion tonnes during the calendar year 2017.
Global cement production is led by China which accounts for more than half of the world’s cement production, a majority of which is consumed within the country. India is second in terms of cement production accounting for 6% to 8% of the global cement production. Developing nations such as Indonesia, India and Vietnam have been some of the fastest growing countries in terms of cement production in the last five years. Over the last five years India’s cement demand has grown at a CAGR of 4% to 5 %, as compared to the global cement demand which grew at a CAGR of approximately 2% over the same period.
The Indian cement market is the second-largest in the world after China and accounts for 294 to 296 million metric tonnes per annum (“MMTPA”) of cement demand in Fiscal 2018. Cement demand in India has grown at a CAGR of 4% to 5% over the last five years. Cement is a high-volume and low-value commodity. Transporting cement beyond a certain distance makes it unviable for end-users, thus making the cement industry largely regional in nature. Cement consumption varies region-wise because the supply and demand balance, per capita income and level of industrial development differ in each state and consequently, in each region. As a result, the share of imports (in local consumption) and exports (in local production) is negligible. The cement industry in India has been growing at 1.2 times of GDP growth in last two decades. However, with continued decline in the investment-to-GDP ratio, there has been significantly lower capital formation in the economy. This, in turn, has reflected in the cement-to-GDP multiplier being consistently below 1.0 till Fiscal 2017. In Fiscal 2018, cement demand to GDP multiplier is estimated to touch 1.2, when cement demand grew faster than GDP. Though this level of multiplier is not sustainable, it signals the beginning of a healthy multiplier phase.
In Fiscal 2018, cement demand is estimated to have grown by 8% to 9%, supported by the government’s push for affordable housing, increased infrastructure spending and low base of the previous year. In Fiscas 2019 and 2020, cement demand is expected to have a year-on-year growth of approximately 6% to 8%. While demand in Fiscal 2019 is expected to be driven by pre-election spending and the low base of the first half of the fiscal, demand in Fiscal 2020 is expected to be driven by growth in the rural housing and infrastructure segments. In the long term, cement demand is expected to grow at a CAGR of 6% to 7% over the Fiscals 2018 to 2023 as compared to a CAGR of 4% to 5% during Fiscals 2013 to 2018, led by a number of infrastructure investments.
Split-grinding: Split-grinding is an arrangement by cement manufacturers whereby the clinker and grinding units are set up at two different locations. Cement being a low value and high volume commodity, production and freight costs are among the highest cost heads for a producer. In order to minimise the cost of transportation of limestone, the clinker manufacturing units have to be located near the limestone reserve (1 tonne of clinker requires approximately 1.5 tonne of limestone). However, in many cases, the transportation of cement from an integrated plant near a limestone mine to the demand centres (more than 500 km) impacts the operating margins of the players and increases purchase cost for the end-user. In such a scenario, split-grinding units are set up, wherein clinker is transported from the integrated plant located close to the mine to the grinding and blending units which are located near the key demand centres. Setting up grinding units in the vicinity of power and steel plants reduces transportation costs for raw materials such as slag and fly ash.
Blending benefits: In addition to the easing of logistical constraints, the degree of blending enables players to optimise their production costs as the additives used, such as fly ash and blast furnace slag, are available to cement manufacturers at a marginal cost compared to limestone. The BIS allows additions of up to 35% of fly ash in PPC and blast furnace slag up to 65% in PSC subject to meeting other quality requirements as prescribed. This substitution of clinker results in substantial cost savings for cement manufacturers as the consumption of clinker is 30% to 40% lower than OPC. Additionally, the reduction in the cost of transportation of clinker (approximately 0.6 tonne per tonne of blended cement) from an integrated unit to a grinding unit further eases the cost of production. A recent trend in the industry is the emergence of composite cement which is produced by blending fly ash and blast furnace slag with OPC. As per the BIS, the proportion of OPC in composite cement can be as low as 35%. This could potentially lead to proliferation of grinding units in and around demand centres and/or steel/power plants, especially in the eastern region where fly-ash and slag are easily available.
Blending to increase: Blending ratio (cement to clinker ratio) for the cement industry is estimated to have improved from 1.41 in Fiscal 2016 (based on a sample covering 50% of the industry's production) to 1.42 in Fiscal 2017, due to demand growth in the eastern (including north east) region (as compared to pan-India). The ratio is among the highest in India due to preference for slag cement. The ratio is estimated to have further improved to 1.43 in Fiscal 2018 and is expected to increase further to 1.44 in Fiscal 2019. The rise is primarily due to the higher acceptance of blended cement, mainly PPC. Apart from the faster growth in the eastern (including north east) region, permission to use PPC in works of the governments’ public works departments (earlier only OPC was permitted) has been driving the increase in the blending ratio.
As a result of the increased blending, the demand for fly ash is expected to increase. The availability of fly ash, a waste product of burning coal, for cement plants is not expected to be an issue. There is a significant number of coal-fired thermal power plants situated across India. Moreover, upcoming plants are also expected to be geographically well-distributed. This is expected to ensure good supply of the raw material. However, slag cement production will be confined to regions where steel plants are located. Slag being a low density commodity, becomes unviable for transport over large distances. With efforts by cement companies to educate customers about the advantages of slag cement in the south, its share is expected to gradually increase in the region.