Cement volumes are likely to expand by 6.5% by FY26: Report

Cement industry growth: As cement industry gears up for a recalibration, signs point to a slowdown in demand growth over medium term, diverging from its recent robust performance. With cement volumes are forecasted to expand at a compounded annual rate of 5 per cent to 6.5 per cent for FY25 and FY26, fueled by significant capacity expansions and heightened competition, a report by CareEdge said. 

Despite a surge in volume growth driven by pre-election activities and infrastructure projects in FY24, latter half of fiscal year witnessed a notable deceleration, a trend expected to persist. Projections indicate a more tempered growth trajectory, 

Pan India's average capacity utilisation levels are anticipated to hover below 70 per cent over medium term. This surplus capacity, coupled with intensified competition, is anticipated to exert downward pressure on cement prices. CareEdge Ratings forecasts a 2-3 per cent decline in cement prices for FY25, reflective of delicate balance between supply and demand dynamics.

While rural housing demand shows signs of moderation post completion of pending units under PMAY-G scheme, infrastructure projects emerge as a silver lining. Government initiatives such as PM Gati Shakti are set to drive investments in key sectors like ros, railways, and airports, promising sustained growth in industry despite anticipated demand slowdown.