Indian demand expected to fall 25% in FY21

Cement demand in India is forecast to contract by up to 25 per cent in FY20-21 due to the coronavirus lockdown and subsequent specific restriction on construction activities, according to ratings agency ICRA. The downturn would be mainly felt in cities while rural housing and infrastructure projects in remote areas are expected to continue to support cement demand.

"ICRA expects cement demand to de-grow by 22-25 per cent in FY2021 given the prolonged nationwide lockdown and subsequent state/city specific restrictions disrupting construction activities," the credit rating firm said in its quarterly update on the sector.

Housing accounts for around 65-70 per cent of India’s cement consumption, followed by infrastructure (20-23 per cent) with the rest accounted for by commercial and industrial capital expenditure.

Cement production is expected to see operating profitability down by 150-200 basis points in the current fiscal year. However, prices are predicted to remain stable or undergo only marginal correction.