Cement industry to see decline in demand

According to Mining News Pro - The domestic cement industry is likely to face yet another decline in demand in FY21 after posting negative growth last fiscal, India Ratings and Research said.The ratings agency expects a “washout” in April 2020 due to the ongoing lockdown, followed by demand decline of around 40 per cent in May.

However, it expects a gradual recovery thereafter. The agency expects a low single-digit growth in Q2 (July-September) period and a significant recovery happening only in Q3 (October-December).Cement demand had declined in FY20, which was only the second instance of a decline in the past 15 years, after the demonetization affected FY17.

“India Ratings and Research expects successive declines in cement demand FY21, following the FY20 trend, with growth plunging to a historical low of negative 4-5 per cent yoy given the nation-wide lockdown till 14 April 2020,” it said.There would be continued labour force and supply chain disruptions for 20-30 days once the lockdown is lifted, and there will be lingering impact of the slowdown on infrastructure and discretionary spending.

“The agency expects a washout in April 2020, followed by a demand decline of around 40 per cent yoy in May 2020 and a gradual recovery thereafter,” it added. The total installed capacity in the Indian cement sector is approximately 500 million tonnes per annum, while cement production is approximately 280 million tonnes per annum, signifying an under utilisation of the capacity.