ICRA expects Indian demand growth to slow

Indian ratings agency ICRA is expecting cement demand growth in the country to taper to about seven per cent in the FY19-20, down from 13 per cent in the previous fiscal.

The slow execution of infrastructure projects and availability of labour due to the general elections have both been issues, according to Sabyasachi Majumdar, senior vice-president of ICRA. In the upcoming September quarter, demand is expected to be low as a result of the monsoon season.

However, consumption is forecast to pick up from the December quarter with growth likely to be driven by housing, primarily rural and affordable housing, and an improved focus on infrastructure. Despite a demand increase of 24Mta in the FY19-20, oversupply may keep capacity utilisation rates at 71 per cent.

Mr Majumdar also said that the fall in coal and petcoke prices in April and May would result in lower power and fuel expenses, therefore boosting the profit of cement manufacturers.