HomeNewsCement demand may grow at 8% in FY22: Report

Cement demand may grow at 8% in FY22: Report

Cement demand may grow at 8-9% during the current financial year as against earlier expectations of 12% growth says a report by ICICI Securities, broking arm of ICICI Bank. The report expects a demand growth of 8% CAGR over FY21-24.

“Potential urban / semi-urban housing recovery (low mortgage rates, better affordability), stable rural housing demand, gradual private capex recovery coupled with higher government-led infrastructure spends (especially during last two years before central government election) would be key demand drivers. East and Central regions with low per capita consumption vs other regions are likely to lead growth, while South may see higher state government spends (after a decline seen during FY20-21),” says the report. After two consecutive years of demand decline, Andhra Pradesh and Telangana are likely to report strong growth with the likely revival of government spending.

According to the report, pace of capacity additions during this period would depend on demand recovery. While about 80 million tonnes of capacities are planned to be added over FY22-24, there could be usual execution delays of 6-12 months in commissioning which would also depend on the pace of demand recovery. Nearly 60% of these capacities are planned to be added in high-growth markets of East and Central regions, and hence, these regions may operate at a stable 77-82% utilisation over FY22-24. On the other hand, North is likely to operate at 85%, West at 70% and South is likely to operate at <65% utilisation over FY22-24, says the report.

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