No amount of mental gymnastics and premeditation can prepare an economy for the political uncertainty and mayhem that is to follow from the elections on Feb 8. Industries meanwhile will suffer. The cement industry for example will find that stagnancy will set in which began to manifest early on during the fiscal year. By Jan-24, the monthly average for domestic offtake (at 3.41 million tons) had already inched downwards considerably compared to the monthly average in Dec-22 (3.97 million tons).

Construction across the country has seen better days—while the private sector is fumbling due to the dramatic rise in costs and tightening consumer purse strings, ongoing public sector projects are facing delays as well as cost overruns. A lack of political stability will only place greater pressure on development spending which may experience more prolonged pauses. Meanwhile, interest rates continue to remain high which is unconducive to bank financing, though construction or mortgage financing are not big-ticket borrowers. Private projects require enough investor interest to make the actual construction kick-off—that’s how projects are typically financed.

In January, there is also seasonality as cold weathers and fogs have kept construction activities humming down. This has brought down the monthly average considerably in FY24. In 7M, total domestic dispatches record a 1 percent incline.

Because exports have witnessed impressive growth this year, total outbound offtake for cement dispatches is up 89 percent in 7M. This facilitated an overall growth of 8 percent in 7MFY24, compared to last year. Exports have a fighting chance and are certainly taking on a bigger chunk of the sales mix—at 15 percent of total dispatches compared to 8 percent in 7MFY23. However, safe for exports, there is not much else on the demand side that could constitute a savings grace.

Companies have kept cement prices elevated thus far without much or any price competition but that may not hold true over the next few months as pressures to sell more mount. After all, the industry is grappling with much higher capacities than ever before, with a demand outlook unlike previous years. While exports are providing a cushion, they are nowhere near the peaks that the industry has seen in the past and have a long way to go. If they keep going—and freight rates can be kept at bay—it will only serve cement companies’ bottom lines where domestic markets fail to make a lasting impression.


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