GDP recovery fuelling Indian cement demand

Cement demand in India is expected to rise by mid-to-high single digits in the medium term, according to Fitch Ratings. This follows an estimated mid-teen rebound in FY22, compared to FY21 which saw a mid-single digit decline due to the pandemic.

An 8.7 per cent recovery in the economy in FY22 is forecast to underpin growth across various construction sectors with cement demand in the infrastructure and affordable housing markets expected to see low double-digit growth on the back of higher public spending and a significant pipeline of projects. The urban housing sector should see mid-to-high single-digit cement sales growth following a rebound in activity over the last few quarters. Industrial construction is also expected to benefit from a revival in corporate capex after a focus on cash conservation during 2000 and 2021 due to COVID-19. 
 
Although the war in Ukraine has had a limited impact on cement demand in India so far, spikes in energy prices have resulted in price hikes by cement producers in a bid to offset some of the costs. However, analysts do not believe these have gone far enough so are anticipating “markedly lower profitability in the April-June 2022 quarter,” says Fitch Ratings.