Mumbai: Country's cement demand growth is expected to recover to around 5 percent during FY18, driven by a pick-up in the infrastructure and housing segments, a report said.
"We expects cement demand growth to recover to around 5 percent during FY2018 as against a decline of 1.2 percent in FY2017, driven by a pick-up in the infrastructure segment, mostly road and irrigation projects and the housing segment," ICRA said in a report.
"While in the short term, demonetisation has had a negative impact on real estate and construction activities and hence on the cement off-take, the impact has started to subside from Q1 FY2018 driven by a pick-up in the infrastructure segment.
"Further, the increased budgetary allocation for the infrastructure sector, which includes roads, railways, metro, irrigation and housing, during FY2018 will directly and indirectly support cement demand," said ICRA Ratings senior vice president & group head Sabyasachi Majumdar.
The higher rural credit and increased allocation for rural, agricultural and allied sectors, including the demand for rural housing, are significant contributors to the overall cement demand mix, added Majumdar.
Cement prices have also recovered from February 2017 and reached pre-demonetisation levels in most markets by April 2017. While improvement in the supply-demand scenario in FY2018 is expected to support the cement prices going forward, sustenance of the same is critical, given the rising costs, ICRA said.
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