Cement demand likely to witness growth
Credit rating agency ICRA has said that domestic cement demand is expected to register a modest growth of ~1 percent in FY2018 on the back of a rebound in cement demand from Q4 FY2018 as against the earlier expectations of Q3 FY2018.
As per the note shared by the agency, the cement off-take has hitherto continued to remain weak in H1 FY2018 and also in October 2017 because of factors such as weak real estate activity, sand shortage and GST implementation issues.
“Going forward, the demand growth is likely to be driven by a pick-up in the housing segment – primarily affordable and rural housing, and infrastructure segment – mostly road and irrigation projects. However, new project announcements from the private sector continue to remain weak and revival of public-private partnership is crucial to improve the pace of infrastructure development,” said senior vice president and group head ICRA Ratings, Sabyasachi Majumdar.
During 7M FY2018, cement production witnessed de-growth of 1.6 percent to 165.6 million MT when compared to 168.3 million MT during 7M FY2017. Production declined by 3.3 percent in Q1 FY2018 and by 0.4 percent in Q2 FY2018 on a Y-o-Y basis.
Demand during Q1 FY2018 was adversely impacted due to various local issues across regions – in the North (especially in the states of UP and Punjab) the off-take was impacted by sand shortage and labour unavailability, while in the West the implementation of the Real Estate Regulatory Authority (RERA) Bill resulted in construction activity slowing down.