Cement dealers hike prices incrementally across India this month, highest rise in south, east markets

The all-India average price increase is in the range of Rs 10-15 per 50 kg bag

Cement dealers have undertaken incremental price hikes since the start of December, following four to five months of flat prices that reduced dealer margins and impacted the profitability of cement manufacturers.

Dealers attribute the hikes to increased demand from the real estate sector, driven by better labour availability post-festive season, and an increase in orders from the infrastructure sector.

The hikes

In western India, where cement prices are highest, dealers have raised prices by around Rs 5-10 per 50 kg bag. In rest of India, particularly in the southern and eastern regions, which are highly fragmented markets, the price hikes have been larger. Prices in these regions remain lower compared to western and northern India.

The new cement prices in western India are at around Rs 350-400 per 50 kg bag, according to dealers, and listings on various B2B platforms.

According to a cement dealer in Delhi, prices on all cement brands have been increased by around Rs 20 per bag, with new prices ranging between Rs 340-395 per bag, depending on the quality and the brand. In southern India, where cement prices are their lowest, dealers increased prices on most brands by up to Rs 40 per bag, according to a large cement distributor in Chennai, taking prices to around Rs 320 per 50 kg bag of cement.

Eastern India, another fragmented cement market, has reported a round of price increases after many months, with observers noting a renewed pace in infrastructure development and real estate construction in some states after the festivities, prompting dealers to undertake a price hike of around Rs 30 per bag.

"Prices have been hiked on all brands, such as UltraTech, Ambuja, Dalmia, and Bangur Cement (the unified brand under Shree Cement). We have seen good demand for cement, although we cannot say now if the price hikes will be fully absorbed," said a cement distributor based in Kolkata.

Prices ‘bottomed out’

According to an InCred Equities report, the hike in cement prices for December will be around Rs 10-15 per bag across all regions. In its channel check report, InCred said dealers feel that prices have "bottomed out", and small price hikes may be in the picture as government capital expenditure improves in the second half of FY25 after election and monsoon-related disruptions.

However, the report added that despite improvement in demand, steep price hikes will be difficult to implement, due to new capacities coming in. Besides, large cement players may prefer to increase volumes and market share, and may keep away from price actions, the report said.

"The availability of labour has increased in large cities as major festivities such as Chhath Puja and Diwali have ended, which has helped in increasing the pace of construction in real estate and infrastructure projects. We expect that the price increases will be absorbed in December," said a cement dealer based in Mumbai.

Analysts said that the full absorption of the price hikes is still a key monitorable, as attempted price hikes in September by cement makers and dealers were unsuccessful. However, the end of the election season and the rise in government expenditure may be signs of price support.

"Currently, it is a dynamic situation in terms of the absorption of price increases. However, with the end of Maharashtra elections and monsoon-related disruptions, cement prices should see an increase going into the fourth quarter of the ongoing fiscal, with government capital expenditure on infrastructure also improving. Again, the situation remains dynamic, and has to be looked into," said Uttam Kumar Srimal, senior equity research analyst at Axis Securities.