Cement makers in India are looking at increasing the price of cement phase wise, starting with a hike of ₹5 to ₹10 per bag being initiated last week. An additional increase of ₹10–15 per bag is anticipated within the next 15 days, likely extending through mid-September.
The revision of cement price, which were expected earlier this year and were thwarted by weak demand due to the Lok Sabha elections, comes amid a slowdown in construction activities.
Attempts to increase prices were made in May and June, but were reversed after being faced with inadequate market acceptance.
On an average, starting September, the anticipated price hikes may range between ₹10 and ₹15 per bag.
Demand slump
“Post mid-August, cement makers have initiated a hike of ₹5 – ₹10 per bag depending on the region and the cement category. But, so far, the acceptance of these hikes is unclear. Demand in general is slow, with July – September period generally being a seasonally slow quarter,” a market participant told businessline.
Price hikes vary according to regions. For instance, it is by ₹5 per bag in the East and around ₹20 – ₹25 per bag in the South.
Currently, price (per August) ranges between ₹305 per bag - in the eastern markets - and ₹370-odd per bag in Central India. These prices are 3- 4 per cent lower than the average prices seen in the first quarter (called exit prices). Prices are 6-7 per cent-odd lower on a year-on-year basis.
Demand for cement is expected to pick up with the festive season and into the second half of the year (October onwards).
“Cement producers are aiming to restore prices to the levels seen at the end of Q4 FY24,” a cement-maker said.
Price Correction
According to a report by consultancy firm, Motilal Oswal, there was ₹10-20/bag price hike across regions with effect from the third week of August. Price hikes “are necessary to restrict earnings downgrades” since cement prices continue to be under pressure for the last few months.
Cement prices have corrected for nine consecutive months (November 2023 to July 2024) amid the double blow of high competition and a slowdown in demand.
“All-India average cement price was down 13 per cent in July, from its peak in October, and the average cement realisation was down 8 per cent in Q1FY25 (April – June),” the report said.
Realisation of cement companies for April – June period was weak. The average realisation declined 3 - 4 per cent quarter-on-quarter.
Continued consolidation in the industry – with top five players holding nearly 54 per cent capacity market share – will bring in pricing discipline, the firm added.