The trend, however, is not expected to continue for the current financial year. Analysts and cement manufacturers point out demand for April-May 2019 has been weak. The first quarter of the financial year is typically a strong demand period for the cement sector. Lok Sabha elections and the model code of conduct, however, slowed down construction activity and hence demand.
Sabyasachi Majumdar, group head, corporate ratings at ICRA, expects cement volumes to grow at 7 to 8 per cent in the current financial year. “We believe rural housing and most of it coming from the Pradhan Mantri Grameen Vikas Yojana contributed to this growth. It looks unlikely that the double-digit trend will continue in FY20.”
The revival in demand seen in the last financial year has also led to narrowing down of demand-supply mismatch in the industry. Industry estimates peg FY19’s effective capacity at 452 million tonnes (MT). With exports of 5 MT and an estimated domestic demand of 312 MT, the cement surplus for FY19 was at 135 MT, or 30 per cent of the effective capacity. The surplus figure was 156 MT or 36 per cent of the capacity in 2018.
Sabyasachi Majumdar, group head, corporate ratings at ICRA, expects cement volumes to grow at 7 to 8 per cent in the current financial year. “We believe rural housing and most of it coming from the Pradhan Mantri Grameen Vikas Yojana contributed to this growth. It looks unlikely that the double-digit trend will continue in FY20.”
The revival in demand seen in the last financial year has also led to narrowing down of demand-supply mismatch in the industry. Industry estimates peg FY19’s effective capacity at 452 million tonnes (MT). With exports of 5 MT and an estimated domestic demand of 312 MT, the cement surplus for FY19 was at 135 MT, or 30 per cent of the effective capacity. The surplus figure was 156 MT or 36 per cent of the capacity in 2018.
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