Demand in Indian cement sector to rebound to 7-8 pc in FY26

IANS July 4, 2025 374 views

The Indian cement sector is showing promising signs of recovery with expected demand growth in FY26. Industry consolidation and improved pricing power are key factors driving this positive outlook. Major players are gaining market share and optimizing capacity utilization. The sector's transformation suggests potential for sustained growth in the coming years.

"We think the cycle is now turning and driving an improved outlook" - BNP Paribas Report
Demand in Indian cement sector to rebound to 7-8 pc in FY26
New Delhi, July 4: The demand in the Indian cement sector is expected to rebound to 7-8 per cent in FY26 and to grow by 6 per cent CAGR over FY26-29 on structural factors, a report showed on Friday.

Key Points

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- Cement demand expected to grow 7-8% in FY26 with structural market improvements

While prices have recovered sharply YTD (year to date) across regions and have been resilient despite early monsoons, price stability at the current levels is key to FY26 profitability, said the report by BNP Paribas India.

"At the same time, we expect pricing power to improve, driven by industry players increasingly prioritising profitability and continued industry consolidation," said Nirransh Jain, India analyst-consumer durables.

India's cement sector has grown to be the world's second largest, by production, but scale does not change its inherent cyclicality.

Although recent years have been challenging on new supply, subdued utilisations, and limited pricing power, "we think the cycle is now turning and driving an improved outlook", the report mentioned.

The industry suffers from oversupply (660 MTPA capacity vs 440 MTPA demand).

"But we see improving demand/supply dynamics as industry consolidates, given market-share gains by the four largest players (58 per cent of total capacity in FY25 vs 45 per cent in FY19); organic expansion now dominated by the top 4; and rising mine auction premiums and royalties favouring leaders who secured raw-material supply through aggressive limestone-mine bids," the report explained.

The combined Index of Eight Core Industries (ICI) increased by 0.7 per cent in May compared to the same month last year, according to the Ministry of Commerce and Industry data. The production of cement, steel, coal, and refinery products recorded positive growth last month.

The final growth rate of the Index of Eight Core Industries for February, March and April was observed at 3.4, 4.5 and 1.0 per cent, respectively, said the ministry.

Cement production rose by 9.2 per cent in May. Its cumulative index increased by 7.8 per cent during April to May, 2025-26 over the corresponding period of the previous year.

Reader Comments

P
Priyanka N
The consolidation among top players is concerning though. When 4 companies control 58% capacity, won't this lead to monopoly pricing? Government should ensure fair competition for smaller manufacturers too.
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Aman W
As someone working in construction, we've already seen cement prices jump 15% this year! Builders are struggling with input costs. Hope this predicted growth brings some relief 🤞
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Sarah B
Interesting analysis! The 7.8% cumulative growth in cement production shows how infrastructure development is driving India's economy. This sector will be crucial for achieving our $5 trillion GDP target.
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Karthik V
The oversupply situation (660 MTPA vs 440 MTPA demand) is worrying. Companies need to focus on exports to utilize excess capacity. Make in India should include cement exports too!
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Nisha Z
With monsoon being unpredictable, hope the cement companies have proper storage facilities. Last year we saw huge wastage due to rains in many states. Sustainability should be priority!

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Tags:
Cement Sector Indian Economy BNP Paribas Manufacturing Infrastructure Growth