Volume, pricing trends hint at improving demand for cement

Mumbai: Cement volumes could climb sequentially by about a third in the three months to September in India, indicating revival of demand in the world’s second-biggest building materials industry that should also benefit from lower input and logistics expenses.Prices moderated in the second quarter, traditionally soft because of the monsoon rains across India, but volume growth points to potential margin expansion in the second half (H2) of the fiscal year that coincides with the post-harvest dry season. Traditionally, prices are the highest in the busy season that begins with the retreat of the annual monsoon rains.“After witnessing a challenging demand scenario but healthy pricing trend during April-September, we believe the industry is poised for a recovery during second half of FY21, led by government’s strong push on reviving the economy and increased traction in metro and tier-I cities,” said Ravi Sodah, analyst, Elara Securities. “Further, improvement in utilisation is likely to support prices and operating leverage amid rising fuel prices.”Operating cost for the industry is likely to be lower due to the lag impact of benign fuel prices. The brokers’ survey with dealers has indicated 7 per cent year-on-year growth in volume offtake in the month of September, leading to total sales volume of 72 million tonnes (MT) for the September quarter — down 7 per cent on-year but up 36 per cent sequentially.The volume recovery seen in May and June, driven by strong demand from the rural and semi-urban areas, has largely sustained in the September quarter. While volumes have recovered well in East, North and Central region, they remain weak in South and Maharashtra, showed channel checks by various brokerages.

from Economic Times https://ift.tt/36Qa3Sj