Indian cement demand growth forecast to slow in FY20

Growth in Indian cement demand is expected to slow to seven per cent in the FY19-20, against 13 per cent demand growth in the FY18-19, according to ICRA. However, average prices in the current fiscal year are likely to be higher while manufacturing costs will decrease.

"We expect cement demand growth to taper off in the FY19-20 after a strong double-digit growth in the previous year. This is already being reflected in tepid growth in the 1QFY19-20, on the back of slowing of the project execution on account of general elections (usually resulting in labour unavailability). In 2QFY19-20, consumption is expected to be on the lower side owing to the monsoon season," said Sabyasachi Majumdar, senior vice president & group head of Corporate Ratings, ICRA. 

The credit ratings agency expects demand to pick up in the 3QFY19-20, driven by housing projects and improved focus on infrastructure segments (particularly road, railway and irrigation).

Cement production in April 2019 decreased 12 per cent MoM to 29.2Mt. Furthermore, in May and June, output slipped 2.1 per cent to 28.6Mt and 0.6 per cent to 28.4Mt, respectively.