Cement demand continued to remain sluggish in July–September quarter with price hikes announced in August and September failing to sustain “in-full”. Hikes were partly absorbed, and in some cases rolled back.

Extended monsoon, slower execution of government infra projects and a 2 per cent slowdown in infra construction, among others are seen as reasons for Q2FY25 exit prices being either flat or seeing a marginal increase (2-3 per cent) over the previous quarter (Q1), but volumes are expected to remain flat on a y-o-y basis.

Market participants told businessline that demand has been “somewhat” sluggish in both institutional and non-institutional segments.

Prices were down at the beginning of Q2FY25, but with hikes announced in September and sustaining in select regions, “there was an overall improvement by the end of the quarter”.

A cement-maker said, the first two months of the quarter - July & August - witnessed a dip of nearly 2 - 3 per cent in prices. In September, there was a hike of ₹35–40 / bag. “Most of the price hike was rolled back, ₹10–15 / bag could be absorbed,” an official of the company said.

Flattish Volume

Another cement-maker said, “Demand improved in September, but it is not enough to cover-up for the volume loss in the preceding two months. Overall demand is estimated to be flattish or even marginally decline YoY in Q2FY25.”

According to consultancy firm Systematix, the industry saw price hike attempts of ₹35-40 / bag in mid-August and early September. One hike was absorbed, but in most region there was a substantial rollback.

“Pan-India prices hover at around ₹349/bag and all the regions saw an uptick of ₹12–15/ bag. Demand stabilised in the month of September, still remain largely subdued, 8–10 per cent, lower vs Q1. Further, there is a possibility of price hike attempts in the months to come. Demand improvement, however, is key to sustaining price increases,” it said in a report.

Price Movements in Q2

A hike of ₹80–100/bag was announced in the southern region while the absorption by the market was limited ₹30–50/bag.

Similarly, in the western region, a ₹40-45/bag hike was announced while the absorption was “not more than ₹20/bag”.

In the northern region, ₹50/bag hike was announced while the absorption was “close to ₹40/ bag”, except in certain sub-markets. In the eastern region, the prices remained stagnant.

“Despite hopes of demand revival from the fag end of Q3, we expect the cement industry growth to taper off from 8-9 per cent to 4-5 per cent for FY25 due to sustained slowdown in demand,” Systematix said.

Sluggish Demand

Demand pan-India is quite sluggish with government projects going slow, including in infrastructure and rural housing. Real estate witnessing some softening in demand.

India’s key infrastructure sector saw 1.8 per cent contraction in August largely led by excessive rains in various parts of the country. InCred Equities said, excess rainfall in the second half of the season impacted overall demand, across regions.

“Demand should improve by 15 – 20 per cent from current levels. Both institutional and non-institutional demand is expected to recover,” it said, while a cement-maker said: “Demand triggers remains intact.”

Demand Triggers

The Varanasi - Kolkata highway to influence trade demand in the central and eastern regions – which is stuck because of land acquisition issues – could see some pick-up; and push for housing projects in Telangana, etc being some factors that could lead to demand improve.

New infrastructure projects are expected to come in Rajasthan, as the state government has been allotted funds through various schemes.

In Uttar Pradesh, over 80-90 new projects have been announced in the last three months. Sub-region wise price movements, InCred said, saw western UP and Uttaranchal adopt a ₹40 – 45 / bag hike; while in Agra and nearby regions prices were down ₹40 / bag (in comparison to Q1FY25). Central UP saw flattish price trends while in East UP price remain stable.

For cement makers, the south Indian region has been the best market in terms of consensus on pricing.

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