Cement Demand in India Faces Challenges
In September, the demand for cement in India did not meet market expectations. This was mainly due to heavy monsoons and specific regional challenges, as reported by Axis Securities. Although there was some improvement from July and August, the demand remained below anticipated levels.
Factors Affecting Demand
The report identified several reasons for the slowdown in demand. A significant factor was the delayed allocation of funds for infrastructure projects, even though cement prices were at their lowest in several quarters. The first quarter of FY25 also faced challenges due to the general election, extreme heat, labor shortages, and unseasonal rains.
Historical Trends and Future Outlook
Historically, cement demand tends to slow during election years. Provisional numbers from the Office of the Economic Adviser showed a 9% growth in cement demand in FY24, but this momentum has slowed in the current fiscal year. Looking ahead, demand is expected to grow by 5% to 7% in FY25, driven by government infrastructure projects and real estate activities.
Government Initiatives
The government’s increased budget for infrastructure and construction in the 2024-25 budget is expected to boost demand in the second half of FY25. The real estate market’s growth and housing initiatives like the Pradhan Mantri Awas Yojana (PMAY) are also expected to sustain cement demand. The PMAY aims to build 3 crore additional houses, addressing housing shortages in both rural and urban areas.
Doubts Revealed
Monsoons -: Monsoons are a seasonal wind pattern that brings heavy rain to India, usually from June to September. This can cause problems like flooding and delays in construction work.
Infrastructure Funding -: Infrastructure funding refers to the money provided by the government or other sources to build things like roads, bridges, and buildings. Delays in this funding can slow down construction projects.
Axis Securities -: Axis Securities is a company in India that provides financial services, including research and analysis on different industries like cement.
FY25 -: FY25 stands for the financial year 2025, which in India starts on April 1, 2024, and ends on March 31, 2025. Companies and governments use this period to plan and report their finances.
Pradhan Mantri Awas Yojana -: Pradhan Mantri Awas Yojana is a government program in India aimed at providing affordable housing to the urban and rural poor. It helps boost demand for construction materials like cement.
