The April – June quarter is expected to be a difficult one for the cement industry. Demand has been moderate (or flat depending on micro-markets) in Q1FY25 – a departure after eight consecutive quarters of strong growth. Prices on the other hand were muted with previously announced hikes being rolled back.

Market sources said, at least two attempts were made to increase prices, once each in April and May; and a third one was mulled in June. But these recoveries did not sustain.

Due to the persisting softness in demand, cement prices in the East and South regions were down 4 per cent y-o-y, followed by a 3 per cent y-o-y dip in the North, Central and West regions. On an average prices were down 3-4 per cent pan-India, y-o-y.

“Cement prices have declined in recent quarters and are likely to stay under pressure. This was due to the intense competition among existing market players, general elections, and the unprecedented heat wave across the country,” a cement-maker told businessline

It is being said, stiff competition singed prices by 5–6 per cent even in the peak construction quarter of Q4FY24 (wherein demand grew 8–9 per cent).

Price Hikes post monsoons

ICICI Securities, said in its report, that the company’s channel-checks showed the highest (price) dips were seen in north and east India, while another consultancy firm, Prabhudas Lilladher said declines were sharpest in the south.

The industry is also expecting demand boost post-budget in July. But “with the onset of monsoons, scope for price recovery in Q2FY25 appears limited,”as pointed out by ICICI Securities in a report.

Incidentally, if demand picks up, upward price revision could happen post-September. “The industry is anticipated to hike cement prices by ₹10 – 45 /bag post monsoon. However, price hike absorption remains a cause for concern due to demand slowdown,” consultancy firm, Nirmal Bang said in a report.

Volume outlook

The firm anticipates demand although H1 demand will be “lacklustre”, the full year is forecasted to be in the 8.5 -9 per cent range with steady demand coming in from commercial and housing segments.

Cement demand in Q1 was affected by factors such as extreme heat, lesser infrastructure activities and unavailability of labour due to the harvesting season. The quarter also saw extreme heat conditions and water shortages in a few pockets, which affected construction activity in these areas. This apart, a 40-day-long General election schedule took toll on volumes too.

In June too, volume movement remained weak. Some geographies witnessed rainfall, while labor shortage persisted.

“Following a strong growth (in the range of ~8-19 per cent y-o-y) over eight consecutive quarters (1QFY23-4QFY24), growth in cement volume is estimated to moderate to 5 per cent y-o-y in Q1FY25,” Motilal Oswal said in its report.

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