Indian cement demand likely to rise as rains recede

Indian cement demand likely to rise as rains recede
06 December 2021

Heavy rains in Tamil Nadu, Kerala, Andhra Pradesh and parts of Maharashtra dragged down cement volumes across sectors at the start of the peak season for the industry which runs from October until May, but cement companies expect demand and consumption to pick up from December as the rains fade.

"Slowly demand is coming back to normal across all sectors. In a week or so we may even see pent-up demand coming back," said M Ravinder Reddy, director at Bharathi Cement told the Business Standard.

As demand fell, commodity prices also declined as players offered discounts to drive up volumes. "Average pan-India prices declined three per cent MoM in November owing to weak demand. The moderation in prices was primarily led by a 4-5 per cent MoM decline in the east part of India, while prices in other regions fell 2-3 per cent month-on-month," said a recent report by Emkay Research.

Input cost pressures are likely to continue, creating price pressure. "Imported coal prices have gone up 200 per cent YoY. Fuel prices are not coming down at all as well. So there is definitely pressure on pricing of the commodity even if demand recovers," added Reddy.

Cement producers are hoping to see input costs decline. "Though input prices have seen some moderation recently, a sustainable improvement in demand/price is critical for the industry’s profitability going ahead. We remain hopeful of demand/price recovery in the coming months with the onset of a busy construction season," said the Emkay report. 

Alongside, though cases of Omicron variant of coronavirus are on a rise in India, players are of the view that it is still too early to have any impact on cement consumption.

“We cannot discount the presence of this new variant but for it to have an impact on demand for cement, it (variant) needs to have a meaningful presence, which is not the case at this stage,” said HM Bangur, managing director at Shree Cement.

Published under Cement News