Home News Cement demand growth expected to continue in fourth quarter

Cement demand growth expected to continue in fourth quarter

According to India Ratings and Research (Ind-Ra) estimation, cement demand growth is expected to continue in Q4FY21 also. The rating agency has pointed out that the aggregate sale volumes of listed cement companies grew 9 per cent YoY in Q3FY21. This trend, Ind-Ra cited was led by the continued momentum in the rural segment and some traction in infrastructure.

“The strong performance in 3QFY21 restricted the volume decline at 6 per cent YoY in 9MFY21. Given the low covid-impacted March 2020 base, Ind-Ra expects continued volume growth in 4QFY21, resulting in an overall decline of just around 2 per cent YoY for FY21,” says the research report.

“A strong rural demand and recovery in the infrastructure segment have been the key drivers of the strong recovery witnessed by the sector.” As per the agency, eastern region is likely to clock growth in FY21 while central and north have also witnessed a smooth recovery.

“The recovery in the southern region has been slower, given its higher exposure to institutional sales and a prolonged monsoon, though exceptions such as NCL Industries Limited (NCL) and Deccan Cements Limited witnessed double digit growth in 9MFY21.”

However, the report says that notwithstanding some recovery 3QFY21 onwards, the Western region would decline the sharpest in FY21, given the highest incidence of Covid-19 within the country.

“Ind-Ra expects capacities of 12.7 million tonnes (mnt) to be added in 4QFY21 (9MFY21: 5.2mnt). However, Ind-Ra estimates the effective capacity addition during the year at around 10mnt, resulting in capacity utilisations of less than 65 per cent owing to the demand impact.”

On the rising input prices, the agency said that pet coke prices hit $125 per mt in March 2021, and are likely to be almost 60 per cent YoY higher in Q4FY21 while coal price, that started increasing from September 2020, are likely to be around 30 per cent YoY higher. Diesel prices are likely to be 20-25 per cent higher YoY basis in Q4FY21.

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