Cement demand to remain depressed

Lacklustre demand for cement, witnessed as part of the recent slowdown, is likely to persist, and as a consequence, apply pressure on the pricing power of cement manufacturers. “As per the data available, around 580,000 houses have been fully damaged due to the floods,” said Waqas Ghani Kukaswadia, Cement Sector Analyst at JS Global in his research report. “As a consequence, demand is to remain depressed for the near future and prices will remain under pressure,” he added. “While an uptick in the coming months is likely due to private housing construction and the end of monsoon, we take cue from the 2010 floods to estimate quantum and timing of broad-based reconstruction demand,” underscored Waqas. “We believe the additional demand, due to the floods, will not be prominent in FY 2023, as many roads and rail links have been damaged and repair work will most likely materialise over a period of many years,” he further stated. “Near term dispatch numbers will hence carry a distortion factor due to these logistical constraints. However, a relatively more pronounced impact will be seen in FY 2024,” Waqas predicted.