Coal news and updates

Cement demand to double in FY17 on high govt spending on infra, construction sectors

Even as demand from the housing sector remains weak, ratings agency India Ratings and Research (Ind-Ra) expects cement demand to double in financial year 2016-17 and grow at 4-6%, double the growth in 2015, on the back of government spending in the construction and infrastructure segments. 

It also estimates cement demand to grow by 3% in FY16E, compared with 5.6% in FY15. 

Cement demand has registered single-digit growth rate in the last six financial years, with the weakest growth in the decade of 2.2% during April-December 2015. 

"Ind-Ra's FY17 Outlook for Cement Manufacturers, expects the improvement in demand in FY17, on the back of a slightly better demand from the construction and infrastructure segments led by government spending," a statement said. 

However, the rating agency does not expect any significant revival in housing demand, in either rural or urban areas, which would keep the overall cement demand growth mid-single digit. 

Cement demand in the current financial year was weak due to the slowdown witnessed across key demand drivers, rural housing (around 40% of cement demand), urban housing (20%-25%) and construction/infrastructure/industrial activities (around 25%). Commercial real estate accounts for 10% of the cement demand. 

"The growth rate so far in this fiscal year was also impacted due to the high base in the corresponding period last fiscal year. Cement demand grew 8.4% during April -November 2014 (FY15: 5.6%)," the agency said. 

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