Will Demand in the Indian Cement Sector Rebound to 7-8% in FY26?
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Synopsis
The Indian cement sector is on the verge of a significant recovery, with demand expected to rise by 7-8% in FY26 and sustain a 6% CAGR through FY29. This uptick is driven by enhanced pricing power and ongoing industry consolidation, promising a brighter outlook for this vital sector.
Key Takeaways
- Demand in the Indian cement sector is expected to rebound to 7-8% in FY26.
- 6% CAGR growth is projected from FY26 to FY29.
- Pricing power is improving due to industry consolidation.
- India is the second-largest cement producer globally.
- Current oversupply poses challenges but dynamics are shifting positively.
New Delhi, July 4 (NationPress) The demand in the Indian cement sector is projected to bounce back to 7-8 percent in FY26 and achieve a 6 percent CAGR from FY26 to FY29, driven by structural elements, according to a recent report released on Friday.
Despite a significant recovery in prices year-to-date (YTD) across various regions, which have shown resilience even with early monsoon impacts, maintaining price stability at these levels is crucial for profitability in FY26, as highlighted by BNP Paribas India.
“Moreover, we anticipate an enhancement in pricing power as industry players increasingly focus on profitability and ongoing consolidation within the sector,” stated Nirransh Jain, an analyst specializing in consumer durables in India.
India's cement industry has emerged as the second-largest globally in terms of production; however, its inherent cyclicality remains unchanged.
While recent years posed challenges with new supply, low utilization rates, and restricted pricing power, the report indicates that “the cycle is shifting, leading to a more positive outlook.”
The sector currently grapples with oversupply (capacity of 660 MTPA against a demand of 440 MTPA).
“Nevertheless, we observe an improving demand/supply balance as the industry consolidates, with the four largest players capturing 58 percent of total capacity in FY25, compared to 45 percent in FY19. The top four companies are now leading organic expansion, while increased mine auction premiums and royalties benefit those who secured raw-material supplies through aggressive limestone-mine bids,” the report elaborated.
As per data from the Ministry of Commerce and Industry, the combined Index of Eight Core Industries (ICI) saw a 0.7 percent rise in May year-over-year, with positive growth recorded in cement, steel, coal, and refinery products.
The final growth rates for the ICI in February, March, and April were 3.4 percent, 4.5 percent, and 1.0 percent respectively.
In May, cement production surged by 9.2 percent, and the cumulative index for April to May 2025-26 rose by 7.8 percent compared to the same period last year.
Point of View
It is essential to recognize the evolving landscape of the Indian cement sector. With a shift towards profitability and consolidation among the leading players, the industry is poised for a much-needed recovery. This is not just about numbers; it's about the broader implications for the economy and infrastructure development in India.
NationPress
26/07/2025
Frequently Asked Questions
What is the expected demand growth in the Indian cement sector for FY26?
The demand in the Indian cement sector is projected to rebound to 7-8% in FY26.
What are the structural factors influencing this growth?
The growth is influenced by improved pricing power and ongoing consolidation among major industry players.
How does India's cement production rank globally?
India's cement sector is the second-largest in the world by production.
What challenges has the cement industry faced in recent years?
The industry has faced challenges such as new supply issues, low utilization rates, and limited pricing power.
What is the current capacity versus demand in the Indian cement industry?
The sector currently has a capacity of 660 MTPA against a demand of 440 MTPA.
