India: ICRA forecasts cement demand to rise 6% in FY17

Indian-based ratings agency ICRA has forecast that domestic cement demand will rise by six per cent in the 2016-17 financial year, the Economic Times reports. It’s assessment for FY18 is for even more rapid growth of seven per cent.

Senior Vice President Sabyasachi Majumdar said: "Cement demand growth will pick up to six per cent in 2016-17 and further to seven per cent in 2017-18... during the current fiscal, it is likely to be driven by the pick-up in the infrastructure segment - primarily road projects and housing segment.

"This apart, there is a likelihood of recovery in rural demand from the second half of the current fiscal given the expectations of a better monsoon.

"With the pace of new capacity addition slowing down, we expect capacity utilisation and supply-demand scenario to show an improvement, especially in 2017-18, which should support cement prices and profitability indicators for cement manufacturers."

ICRA also highlighted recent legislative reforms to allow the transfer of mineral rights between producers as a helpful change, stating: "The companies acquiring cement units will now have raw material security with the access to limestone mines of their acquisition targets.

"In cases where companies have mortgaged these licences, the lenders will be able to transfer it to a potential buyer, which will help creditors recover some of their dues."