Cement demand likely to grow 8% in FY20

Mumbai: The domestic cement demand is likely to grow by eight per cent this fiscal which may push the capacity utilisation to 71 per cent from 65 per cent in FY18, the report said on Wednesday. The growth in demand will be driven by a likely 18-20 million tonnes per annum (MTPA) of additional production capacity during the fiscal.

The domestic cement production rose by around 13 per cent between April 2018 and February 2019 as compared to six per cent year-on-year growth in FY18, the rating agency Icra said in its report. "For FY20, we expect a demand growth of eight per cent and given the limited capacity addition, this is likely to result in an improvement in the industry's utilisation to 71 per cent in FY20 from 65 per cent in FY18.

Improved capacity utilization is likely to support the price uptick which has been seen since March 2019," Icra senior vice president Sabyasachi Majumdar said. He further said around 18-20 MTPA of capacity is likely to get added in FY20. "However, a disproportionate part of the capacity addition is grinding opposed to clinker capacity. Thus, the actual production from new capacities could be lower. With the incremental demand of around 24-28 million tonne being greater than the incremental supply, this is likely to translate to improved capacity utilisation," Majumdar said.