Pickup in infra development to raise cement demand

New Delhi: A pickup in Centre’s infra development activities is expected to raise cement demand in January, said Motilal Oswal Financial Services Ltd. (MOFSL). According to MOFSL, cement demand has started picking up from the second half of December 2021 after the volume decline in November 2021. “We estimate that sales volume in December 2021 […]

New Delhi: A pickup in Centre’s infra development activities is expected to raise cement demand in January, said Motilal Oswal Financial Services Ltd. (MOFSL).

According to MOFSL, cement demand has started picking up from the second half of December 2021 after the volume decline in November 2021.

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“We estimate that sales volume in December 2021 should be up over 20 per cent MoM,” the MOFSL said.

“There should be a YoY improvement in demand in December 2021 across regions (excluding East India).”

As per the report, the demand surge comes after November, when volumes declined due to unseasonal rainfalls, sand availability crisis in East India and a few pockets of Uttar Pradesh and an auspicious marriage season after the Covid-19 outbreak last year.

Besides, it said that demand should improve further from January 2022, with a pickup in government infra activities.

Historically, cement demand in January has been 4 per cent higher than December.

“On a high base of 4QFY21, we expect industry volumes to decline by 3-5 per cent YoY in 4QFY22. Growth in industry volumes in FY22E should be at 8.6 per cent YoY.”

Furthermore, it said that cement prices have been under pressure in Nov-Dec 2021, led by a steep volume decline in November 2021 and volume push at the year-end by a few key players.

Consequently, India’s average cement prices fell 6.5 per cent MoM in December 2021.

“The industry will be in a better position to implement price hikes from January 2022 onwards as we expect a further uptick in demand going forward.”