The recent spike in Covid-19 cases and consequent restrictions imposed in almost all states across the country from April 2021 onwards is expected to impact the demand-supply dynamics in the cement industry in Q1-FY22, according to CARE Ratings.
Further, even the rural demand that had aided the growth in demand last year seems to be impacted by the second wave of Covid-19. CARE Rating's expects the cement production to grow in the range of 4% to 7% in FY22. With ease in restrictions from July onwards, demand is expected to pick up on a gradual basis as the situation evolves based on the containment of the virus and the progress in the vaccine inoculation drive.
Cement production within the country rose by 13.3% in March 2021 as compared with the month of February 2021 and increased on a yearly basis by 32.5% as compared with March 2020.
"This growth was primarily on the back of pick-up in infrastructure activities particularly in the residential real estate segment, including affordable housing. Also, the construction activities usually peak in the March end quarter just before the start of the monsoon season.
However, on a cumulative basis, production fell by 12% in FY21 as compared with 0.9% decline for the same period in FY20 and a growth of 13.1% FY19. The nationwide lockdown imposed in the last week of March, 2020 and the consequent challenges witnessed by the industry such as decline in consumer demand, reverse migration, staggered shifts and bottlenecks in logistics in H1-FY21 led to this overall yearly fall in production," CARE Ratings has said.