Cement prices may rebound with supply-demand boost
Rating agency ICRA on said that it expected cement demand growth to recover to about 5% during 2017-18 as against a decline of 1.2% in 2016-17, driven by a pick-up in the infrastructure segment, mostly road and irrigation projects and the housing segment. Cement prices recovered from February 2017 and reached pre-demonetisation levels in most markets by April 2017. While improvement in the supply-demand scenario in FY18 is expected to support the cement prices going forward, sustenance of the same is critical, given the rising costs. “While in the short term, demonetisation has had a negative impact on real estate and construction activities and hence on the cement off-take, the impact has started to subside from Q1 FY18, driven by a pick-up in the infrastructure segment,” said Sabyasachi Majumdar, senior vice-president & group head, ICRA Ratings. Further, the increased budgetary allocation for the infrastructure sector, which includes roads, railways, metro, irrigation and housing, during FY18 will directly and indirectly support cement demand. Also, higher rural credit and increased allocation for rural, agricultural and allied sectors, including the demand for rural housing, are significant contributors to the overall cement demand mix, he added. All-India cement production dwindled by 1.2% YoY to 279.8 million MT in FY17 for the first-time over the last decade. Cement volumes declined between November 2016 and March 2017 by 9% when compared to the corresponding previous, following demonetisation.
Tags : ALLIED