Cement sector sees demand revival

Retail demand was under pressure during the first two months of FY22 with April and May production falling by 12 percent and 17 percent respectively month-on-month (m-o-m) as per Index of Industrial Production data.

Retail demand was under pressure during the first two months of FY22 with April and May production falling by 12 percent and 17 percent respectively month-on-month (m-o-m) as per Index of Industrial Production data.

The localised curbs, which were prevalent in majority of the states, impacted cement demand, especially in rural pockets, unlike last year where rural demand was the key support to the demand.

Further, a seasonally weak period due to onset of monsoon also somewhat contributed to this decline.

However, it rebounded sharply in June with easing of Covid cases and gradual resumption of business activities.

Cement prices also moved up sharply with a rebound in retail demand in June.

“This clearly reflects strong underlying demand waiting for the things to get normal. Further, key major infrastructure projects continued to support demand though on a moderate scale due to limited labour availability,” said ICICI Direct in a report.

“We strongly believe in the resilience of the Indian economy as it continues to navigate the impact of Covid 19. Demand is expected to recover supported strongly by Government’s increased spending on large scale infrastructure projects which augurs well for the cement sector. We believe we are well poised to capitalize on the growth momentum in the ensuing period,” Sridhar Balakrishnan, Managing Director and CEO of ACC Ltd said.