After the monsoons
While the demonetisation of the Indian economy has seen cement sales significantly drop, the country’s cement producers are waiting for the positive medium-term effects of good monsoons to kickstart an acceleration in demand growth.
Ambuja Cement saw a 6.6 per cent YoY drop in Jul-Sep sales in 2016
Uncertainty has once again eclipsed the growth of India’s 420Mta cement sector. Good monsoon rains with uniform spread across India in the July-September period have taken a toll on cement growth. As construction activity declined in almost all regions, cement sales were poor and prices came under pressure, impacting cement company profits.
However, while short-term cement demand is affected, the 2016 rains ended two years of consecutive droughts in India and thereby kindle hopes for improved medium- to long-term growth with industry officials. But the expected increased cement demand following good monsoons typically occurs with a 6-12 month time lag, so cement producers will have to wait a little while longer for a sales upturn.
