Cement Volumes to Reach Pre-Covid Levels in FY22

Domestic cement demand is expected to increase by 18%-20% in FY22 with the volumes reaching back to around FY19-FY20 levels. This follows a sharp volume contraction witnessed in FY21, according to ICRA Ratings. The agency has

BY Realty Plus
Published - Friday, 05 Feb, 2021

Cement Volumes to Reach Pre-Covid Levels in FY22

Domestic cement demand is expected to increase by 18%-20% in FY22 with the volumes reaching back to around FY19-FY20 levels. This follows a sharp volume contraction witnessed in FY21, according to ICRA Ratings. The agency has revised the sector’s outlook to stable from negative given the expected improvement in the off-take supported by rural demand, including affordable housing, along with recovery in the infrastructure segment supported by the recent budgetary allocations. Cement production reported a 18% year-on-year contraction to 202 million MT in the first nine months of FY21. The major impact was felt in Q1 FY21 with a production contraction by 38.3% Y-o-Y owing to the adverse impact of the lockdown with the construction activities coming to a halt, primarily in April 2020. The production increased by 16.1% month-on-month to 24.2 million MT in September 2020 and by 11.2% month-on-month to 26.9 million MT in October 2020. In November 2020, the production declined by 7.1% year-on-year to 25.3 million due to the festive season resulting in slowdown of construction activity. While there has been some improvement by 9% month-on-month in December 2020 to 27.5 million MT, it continues to remain lower by 10% year-on-year. The cement prices were higher by 29% year-on-year, 4% year-on-year and 3% year-on-year in the southern, western and northern markets and lower by 4% in the eastern market in nine months of FY21, according to ICRA.