Demand for Cement in India on the Rise

Published By : 06 May 2015 | Published By : QYRESEARCH

The demand for cement in India is likely to rise by almost 6.5 per cent to 7 per cent in the next financial year owing to improvement in investment cycle, infrastructure, and the overall economy, states the independent rating agency ICRA.

The demand for cement is projected to register a gradual improvement in the medium term mainly due to the recovery in investment cycle, infrastructure in the country, and the national economy on the whole, ICRA stated on Wednesday.

ICRA forecasts the demand to increase by 6.5 to 7 per cent over financial year 2016 (FY16) and the pace of growth within the cement sector is expected to mimic the ongoing trends in economic upturn.

The capacity utilisation of cement in India is anticipated to remain moderate at 72 per cent owing to the overhang in capacity. However, this is expected to rise to 77 per cent in financial year 2017 fuelled by the slowdown in new capacity addition and the rise in demand, stated ICRA.

The overall production of cement in India rose by 5.6 per cent in the current financial year compared to the 3 per cent rise in financial year 2014.

Sabyasachi Majumdar, vice president of ICRA stated that even though the growth in cement demand in India in the first half of the current financial year was supported by delayed monsoon and pre-election spending, the rate of growth slowed down in the second half of FY15 because the election cycle came to an end.

Majumdar further said that the demand for cement was also affected by a drop in government spending during the quarter of January to March 2015, slow recovery in infrastructure spending, and the slump in demand stemming from real estate. 
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