After the monsoons
While the demonetisation of the Indian economy has seen cement sales significantly drop, the country’s cement producers are waiting for the positive medium-term effects of good monsoons to kickstart an acceleration in demand growth.
Uncertainty has once again eclipsed the growth of India’s 420Mta cement sector. Good monsoon rains with uniform spread across India in the July-September period have taken a toll on cement growth. As construction activity declined in almost all regions, cement sales were poor and prices came under pressure, impacting cement company profits.
However, while short-term cement demand is affected, the 2016 rains ended two years of consecutive droughts in India and thereby kindle hopes for improved medium- to long-term growth with industry officials. But the expected increased cement demand following good monsoons typically occurs with a 6-12 month time lag, so cement producers will have to wait a little while longer for a sales upturn.