Strong housing demand supports steel, cement consumption: Economic Review

Housing demand continues: After registering its multi-year low during the peak COVID-19 pandemic, the housing demand in India has continued to gain substantially, hitting its all-time high in the third quarter of the previous fiscal.

According to the latest Monthly Economic Survey July released by the Ministry of Economic Affairs, the housing demand in the country has remained robust for the quarter ended June 2024 (Q1FY25).

According to the data released by PropTiger, a real estate advisory firm, quoted by Economic Survey, the housing demand in eight major cities recorded a 41.8 per cent year-on-year growth.

“Housing sales in 8 major cities moderated on a sequential basis in Q1 of FY24, they registered a YoY growth of 41.8 per cent, reflecting positive consumer sentiments about real estate investments on the back of strong macroeconomic fundamentals,” the July’s Economic Survey suggested.

The strong housing demand also leads to an increase in steel consumption in the country amid rising imports from China. Apart from steel, the cement industry is also facing a strong demand due to stronger liquidity inflows in the housing sector.

“The increase in steel consumption and cement production is substantially induced by continuously strengthening housing demand as housing sales increased in Q1 of FY25 over the corresponding period of the previous year,” the survey added.

Investments in domestic cement businesses have also surged after the Government’s clear guidance on the continued push for infrastructure in Bihar and Andhra Pradesh. Recently, the industry witnessed key mergers and acquisitions with cement makers shifting focus to Southern India.

Despite global headwinds in steel manufacturing, the housing demand is pushing the steel demand. Notably, the steel prices in India have plunged to a three-year record low amid higher imports and subdued exports due to falling steel consumption in China. China’s cement industry is facing a strong decline in demand after the government is trying to shift from real estate-incited growth after Evergrande’s fall.