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

Cement industry growth: As the cement industry gears up for a recalibration, signs point to a slowdown in demand growth over the 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, the latter half of the 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 the 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 the delicate balance between supply and demand dynamics.

While rural housing demand shows signs of moderation post the completion of pending units under the 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 roads, railways, and airports, promising sustained growth in the industry despite the anticipated demand slowdown.