Cement demand to grow 6% in FY17: Icra

Mumbai, June 29: Demand for cement is likely to grow by 6% in the current fiscal and further rise to 7% in 2017-18, on improvement in infrastructure segment, says a report.

According to rating agency Icra, cement demand was relatively muted at 5% in 2015-16. “Cement demand growth will pick up to 6% in 2016-17 and further to 7 per cent in 2017-18... during the current fiscal, it is likely to be driven by the pickup in the infrastructure segment — primarily road projects and housing segment,” Icra Ratings senior vice president Sabyasachi Majumdar said. “This apart, there is a likelihood of recovery in rural demand from the second half of the current fiscal given the expectations of a better monsoon,” Majumdar added.

Icra also noted that cement demand would also be supported by the construction of a new capital for Andhra Pradesh and the focus on irrigation and water grid schemes by Telangana. However, it noted that a number of structural constraints needed to be sorted out for project implementation to gather pace in the other infrastructure sub-segments. “With the pace of new capacity addition slowing down, we expect capacity utilisation and supply-demand scenario to show an improvement, especially in 2017-18, which should support cement prices and profitability indicators for cement manufacturers,” Majumdar said.