Cement sector remains weak, 2% growth expected in FY'18: Icra

The Cement industry, which is witnessing a slow demand, continued to remain weak in the ongoing fiscal so far and is expected to have only 2 per cent growth in 2017-18, rating agency Icra said.
This was led by several factors including weak real- estate activity, sand shortage and issues related to implementation of GST, among others, it added.
According to Icra, the cement offtake in November 2017 had a marginal increase of 0.5 per cent month-on-month at 24.1 million metric tonne (MMT).
"Based on the current trend, cement demand is likely to report a modest growth of around 2 per cent in 2017-18," said the report.

Though cement demand registered year-on-year growth of 17.3 per cent in November 2017, this was primarily due to the base effect arising out of low production of 20.5 MMT in November 2016, the month in which demonetisation was announced.
During April-November, cement production witnessed a marginal growth of 0.6 per cent at 190.0 MMT as against 188.8 MMT in the corresponding period.

"Production declined 3.3 per cent in June quarter and by 0.4 per cent in September quarter year-on-year. During the first quarter, demand was adversely impacted due to various local issues across regions," it added.
In north, especially in Uttar Pradesh and Punjab, offtake was impacted by sand shortage and labour unavailability, while in the west, the implementation of the Real Estate Regulatory Authority (RERA) Bill resulted in slowing down of the construction activity.

In south, Tamil Nadu and Kerala were worst hit as demand was affected due to sand shortage, drought (impacting rural offtake) and weak housing activity.
"A pick-up in the affordable and rural-housing segments and infrastructure primarily road and irrigation projects
is likely to help improve the cement demand growth to 4-5 per cent in 2018-19," ICRA Ratings Senior Vice President & Group Head Sabyasachi Majumdar said.
However, he also added that the project announcements from the private sector continue to remain weak.