According to Care Ratings, the demand for cement is expected to be impacted in Q1-FY22 on account of localized lockdowns in almost all states owing to the recent spike in Covid-19 caseload. The varied localised restrictions imposed in almost all the states in the country since April 2021 could slow down the construction activities and in turn affect the demand-supply scenario for cement industry in Q1-FY22, the report said.
In addition to the above, growth in rural demand had aided the demand for cement in the last fiscal year. However, that may not be the case this year as rural areas too seem to be affected on account of the second wave of Covid-19.
CARE Ratings expects the overall cement production to grow in the range of 4% to 7% in FY22. Assuming that the restrictions will be in place till end of June, 2021, demand from July onwards is expected to pick up on a gradual basis as the situation evolves based on the containment of the virus and the progress in the vaccine inoculation drive. Further, possibility of a third wave of Covid-19 in the near future might affect the industry dynamics again.
In FY21, cement production fell by 12% as compared with 0.9% decline for the same period in FY20 and a growth of 13.1% FY19. The nationwide lockdown imposed in the last week of March, 2020 and the consequent challenges witnessed by the industry such as decline in consumer demand, reverse migration, staggered shifts and bottlenecks in logistics in H1-FY21 led to this overall yearly fall in production.