Must-know: Factors that influence the cement industry
The cement industry is highly affected by regulatory norms. This is prominent in developed countries where environmental issues are more stringent. This adds to the companies’ costs.
An increased focus on infrastructure development increases cement demand. This effect is prominent in emerging economies. A substantial portion of this demand comes from infrastructure projects. The projects are funded by the government.
The cement industry relies on power. Power and fuel costs account for ~30% of the price of cement when it’s sold. As a result, power and fuel have a major impact on the company’s operating expenditure.
The blend is heated in a rotary kiln. Gas, oil, or pulverized coal are used to ignite the flame at one end of the kiln. The clinker from the kiln passes into a cooler, where convective airflow cools the clinker for subsequent handling and grinding.
The company takes a sample of the limestone at various levels in the form of steps. The steps are called benches. The benches determine the quality assurance. Since quality varies, the bench compares it with the standard that’s required. This is called limestone benching.
Cement is classified into various categories based on its composition and specific end uses. Cement is classified as either portland, blended, or specialty cement. Investors can access the cement industry through the Vanguard FTSE Emerging Markets ETF (VWO).