Cement demand expected to drop 20 per cent in June quarter
Cement demand in the June quarter of this fiscal is expected to drop 20 per cent because of the localised restrictions implemented by most state governments to break the Covid chain, a rating agency said on Tuesday.
Fitch Ratings said cement demand from rural housing, which accounts for nearly a third of the total domestic market, may decrease to a larger extent as it is more dependent on individual customers.
However, demand from other segments such as urban housing, infrastructure and commercial construction is likely to be less affected because these are less dependent on retail sales.
Key energy commodities, including petroleum coke, imported coal and diesel, which together account for more than 50 per cent of the cement industry’s costs, rose sharply, particularly after the December quarter of the last fiscal year.
The sharp increase in demand for glass bottles from the pharma sector, driven by Covid-19 vaccination drive, and a healthy growth in end-user sectors such as automobiles and construction is expected to drive up revenues by 12 per cent year-on-year for domestic glass makers in fiscal 2022.
The recovery, already visible since the second half of fiscal 2021, is expected to continue in this fiscal.