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27 February 2018
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Cement
(The Total Investment & Insurance Solutions)
Domestic
Cement production in 9M FY2018 at 216.5 million MT is higher by 2.7%, compared
to 210.8 million MT in 9M FY2017. According to an ICRA note, the cement
off-take continued to be weak in 8M FY2018 and showed only a marginal increase
of 0.5% in November 2017 on an M-o-M basis at 24.1 million MT. However, in
December, 2017, production increased by 8.4% on an M-o-M basis to 26.3 million
MT. Based on current trends, ICRA expects demand growth of around 3% in FY2018.
This demand growth is expected to improve to 4-5% in FY2019. The
Total Investment & Insurance Solutions
Sabyasachi Majumdar, Senior Vice President & Group Head, ICRA said, “This demand growth is bolstered by a pick-up in the housing segment – primarily affordable housing, rural housing and higher infrastructure spend. Improved rural incomes, higher rural credit and increased allocation for rural, agricultural and allied sector are likely to boost rural housing demand. Further, PMAY continues to be a major driver for cement demand with around 50 lakh houses targeted in the rural areas and 37 lakh houses in the urban areas in FY2019. Also, the demand is likely to be supported by the higher outlay on urban housing and the increased thrust on infrastructure as reflected in 21% higher allocation.” The Total Investment & Insurance Solutions
In Q1 FY2018, cement production declined by 3.3% to 75.7 million MT on a Y-o-Y basis. This was primarily due to the various local issues across regions such as sand shortage, implementation of the Real Estate Regulatory Authority (RERA) Bill and drought. In Q2 FY2018, the GST transitional issues, the monsoons and continued sand unavailability were the factors which impacted demand. Cement production reported a decline of 0.4% in Q2 FY2018 to 68.8 million MT on a Y-o-Y basis. In Q3 FY2018, production increased by 11.6% to 75.6 million MT supported by demand in AP, Telangana, the eastern (except Bihar) and western markets. Also, production was lower in Q3 FY2017 on account of demonetisation. Rural housing has witnessed a pick-up, post monsoons, due to the improvement in rural economy.
In the western and eastern markets, prices are higher by Rs. 40/bag and Rs. 20-25/bag respectively in 10M FY2018 compared to 10M FY2017. While the prices continue to remain almost at similar levels in 10M FY2018 compared to 10M FY2017 in the northern markets, they were lower by Rs. 10/bag in the southern markets. The Total Investment & Insurance Solutions
“While the cement prices in most markets are higher or at previous year’s level in 10M FY2018, the cost-side pressures on account of higher power and fuel and freight costs are likely to weigh negatively on the profitability of the cement companies during Q4 FY2018,” Majumdar added.The Total Investment & Insurance Solutions
Sabyasachi Majumdar, Senior Vice President & Group Head, ICRA said, “This demand growth is bolstered by a pick-up in the housing segment – primarily affordable housing, rural housing and higher infrastructure spend. Improved rural incomes, higher rural credit and increased allocation for rural, agricultural and allied sector are likely to boost rural housing demand. Further, PMAY continues to be a major driver for cement demand with around 50 lakh houses targeted in the rural areas and 37 lakh houses in the urban areas in FY2019. Also, the demand is likely to be supported by the higher outlay on urban housing and the increased thrust on infrastructure as reflected in 21% higher allocation.” The Total Investment & Insurance Solutions
In Q1 FY2018, cement production declined by 3.3% to 75.7 million MT on a Y-o-Y basis. This was primarily due to the various local issues across regions such as sand shortage, implementation of the Real Estate Regulatory Authority (RERA) Bill and drought. In Q2 FY2018, the GST transitional issues, the monsoons and continued sand unavailability were the factors which impacted demand. Cement production reported a decline of 0.4% in Q2 FY2018 to 68.8 million MT on a Y-o-Y basis. In Q3 FY2018, production increased by 11.6% to 75.6 million MT supported by demand in AP, Telangana, the eastern (except Bihar) and western markets. Also, production was lower in Q3 FY2017 on account of demonetisation. Rural housing has witnessed a pick-up, post monsoons, due to the improvement in rural economy.
In the western and eastern markets, prices are higher by Rs. 40/bag and Rs. 20-25/bag respectively in 10M FY2018 compared to 10M FY2017. While the prices continue to remain almost at similar levels in 10M FY2018 compared to 10M FY2017 in the northern markets, they were lower by Rs. 10/bag in the southern markets. The Total Investment & Insurance Solutions
“While the cement prices in most markets are higher or at previous year’s level in 10M FY2018, the cost-side pressures on account of higher power and fuel and freight costs are likely to weigh negatively on the profitability of the cement companies during Q4 FY2018,” Majumdar added.The Total Investment & Insurance Solutions
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