Indian demand set to decline 20% in June quarter

Indian cement demand in the April-June 2021 quarter is expected to drop by 20 per cent as a result of localised restrictions related to COVID-19 cases in the country, according to Fitch Ratings.

Cement demand from rural housing is expected to decrease by a larger extent as it is more dependent on individual customers. Consumption from other segments, such as urban housing, infrastructure and commercial construction, is likely to be less affected.

The input costs for petcoke, imported coal and diesel have also surged, particularly after the October-December 2020 quarter.

"We expect the impact to be more visible in the June quarter, but the mid-single-digit price increases by the cement companies after the third quarter of FY20-21 will help to cushion the overall impact on profit," said Fitch Ratings in its report.

As manufacturing plants and construction sites can still operate during the current lockdown in most states, there is expected to be significantly less disruption to logistics services and labour availability than under last year’s restrictions.