Cement production expected to remain low in coming quarter: CARE Ratings

A research report by CARE Ratings on cement industry shows that cement production is expected to remain subdued in the coming quarter and the overall recovery to start in Q3 FY17. Cement production in the first quarter saw de-growth of 3.9%. Cement production stood at 72.67 million tonnes in Q1FY17 vs 75.7 million tonnes in Q1 FY 16. Cement production in the country peaked in Q4FY16 at 78.47MT. For the period April‘17 to July’17, the production has declined by 3.5% to 95.37 million tonnes vs 98.87 million tonnes during the same period last year, the research showed. According to the research, subdued activity in the real estate segment would impact the overall demand and this would keep the prices and price volatility under check With RERA implementation to be completed across all major markets by the end of Q2 FY17 along with clarity on the impact of GST on the realty sector it expects construction activity to pick up gradually post Q2FY17. Affordable housing and various Government lead housing schemes would lead demand recovery for cement from real estate segment, the report said. “Infrastructure project implementation, led by Smart City Projects across 60 cities and national highway projects would be major demand drivers in infrastructure segment. Implementation in the first batch of 20 smart cities has already taken off in stages, and for the remaining 40 smart cities chosen in September 2016, we expect the project implementation to begin Q3 FY17 onwards which should drive demand for cement,” the report added. Demand from other segments namely- industrial segment demand would remain subdued while that from commercial segment is expected to remain stable.