Owing to slower pace of project execution, the demand for cement has been tepid in the first quarter of the current fiscal. In April this year, cement production stood at 28.7 million MT, which is lower by 13.3 per cent as compared to March 2019. “We expect cement demand growth to taper in FY20 to around 7 per cent from double digit growth of 13 per cent in the previous year. The demand has been tepid in Q1 FY2020 due to slowing of the project execution on account of general elections,” Icra senior vice president Sabyasachi Majumdar said. He further said that in Q2 FY20, the consumption is expected to be on lower side owing to the monsoon season. “Hence, we expect the demand to pick up in Q3 FY20 and the growth is likely to be driven by housing, primarily rural housing and affordable housing, and improved focus on infrastructure segments, mainly road, railway and irrigation projects,” Majumdar added. While the incremental demand of around 24 million MT is greater than the incremental supply, the capacity overhang is likely to keep the utilisation at moderate levels 71 per cent in FY20, despite some increase from 69 per cent in FY19. The cement companies’ profitability is likely to increase in Q1 FY20 on the back of higher prices and lower input costs.

(Economic Times)