Cement demand to cool down

Noted credit rating and research agency ICRA expects the domestic cement growth to slow down to around 7% in FY2020. Agency in a recent sectoral report has emphasized weak offtake in cement in Q1 FY2020 as the possible sign of a year long slowdown.

 Sabyasachi Majumdar, Senior Vice President & Group Head – Corporate Ratings, ICRA said:  “We expect cement demand growth to taper off in FY2020 after a strong double-digit growth in the previous year. The is already being reflected in tepid growth in Q1 FY2020, on the back of slowing of the project execution on account of general elections (usually resulting in labor unavailability). In Q2 FY2020, the consumption is expected to be on lower side owing to the monsoon season. However, ICRA expects the demand to pick up in Q3 FY2020 with the growth likely to be driven by housing, primarily rural housing and affordable housing, and improved focus on infrastructure segments, mainly road, railway and irrigation projects.”

In April 2019, cement production at 29.2 million MT was lower by 12.0% on an M-o-M basis. Further, in May 2019 and June 2019, it declined by 2.1% to 28.6 million MT and by 0.6% to 28.4 million MT respectively.

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