While India’s cement consumption saw a strong double-digit advance in 2018, such rates are unlikely to be sustainable and expectations are that consumption growth will moderate to more stable levels in 2019. Gradual improvements in capacity utilisation rates and input costs are also on the cards, while the outlook for prices still remains unclear despite an upswing in some regions at the start of this year.
Calendar year 2018 was significant for the Indian cement sector as domestic cement consumption increased by 15 per cent – a level not achieved in over a decade. While on first impressions this extraordinary performance bodes well for the industry given concerns over the country’s large cement supply-demand imbalance and subdued pricing environment, the double-digit growth rate should be viewed in light of a low 2017 comparison base when the cement market was feeling the impact of the government’s overnight demonetisation move in late 2016. Nevertheless, elections in key Indian states such as Madhya Pradesh, Rajasthan and Chhattisgarh in 2018 did support cement demand during the year due to the pre-election rush to complete projects.
