Given tepid demand due to monsoon, festivities weighing on construction activity, a lull in pricing will prevail for some months ahead
All eyes are on demand expansion and input costs mainly petcoke prices
The big support for cement demand comes from government capex, which is likely to be robust this fiscal (FY2026)
Large capacity additions and market consolidation could see higher supply in the market that will weigh down cement prices
Although the industry anticipates an upward trend in cement prices, driven by rising rural consumption supported by improved farm cash flows, executives caution that intensifying competition could limit significant price gains.
Dealers have increased prices by Rs 5-10 per bag in western India, and by about Rs 20 per bag in northern India. On a lower base, prices in eastern and southern India have also increased by Rs 30-40 per bag, according to cement dealers.
Cement prices are expected to be lower in the next fiscal by up to 3 per cent. The correction is likely to happen, as large players continue to consolidate and expand production in a bid to secure a larger market share.
Although prices have bounced back from lows it is unlikely that they will go so high that companies can clock huge profit margins
Cement manufacturers tried to hike prices in April and May but did not succeed
Aggressive volume push at the expense of pricing resulted in an about 6% sequential decline in cement prices to Rs 370- Rs 375 on average per 50 kg bag in the fourth quarter.
Cooling input costs will also help cut retail prices, Crisil Ratings said in a report on Tuesday.
Cement prices have tumbled back to September levels. This raises doubts on the ability of companies to pass on rising costs to consumers and protect profitability
UltraTech has hiked cement prices to combat rising energy costs, but the continuing pressure on margins means more will be needed
The contractors, government agencies and the poor are being adversely affected due to the exorbitant rise in steel and cement prices, said Nitin Gadkari.
Was it only pent-up demand and supply disruptions that sustained high cement prices in the past two months?
The prices of key raw materials have shot up by 30-50 percent (Rs 120-130 per bag) during the COVID-19 outbreak.
During April-September 2016-17, cement prices in the North were higher by around Rs 60-65 per bag, compared to the same period in 2015-16, ICRA said in a statement.
Post monsoon, with the expected pickup in demand, the company expects to see Rs 20-25 per bag increase in cement prices, Ashok Gutgutia, Vice Chairman & Managing Director of Burnpur Cement told CNBC-TV18.
All India average cement price currently ruling Rs 285 - 290 per bag compared to an average price of Rs 308 per bag in December 2014, the report by Reliance Securities said. Northern and western regions have witnessed maximum correction between 10-12 percent.
"Three lakh tonnes of cement have been sold while 95 lakh tonnes have been booked by various government departments through the portal where 37 cement makers have got 117 factories registered," Nitin Gadkari said.
The company had posted a net profit of Rs 34.87 crore in the year-ago period. Total income of the firm fell by 8.69 per cent to Rs 394.39 crore in the first quarter as against Rs 382.65 crore in the corresponding quarter of 2013-14.
The company expects both volumes and prices to improve over the next six months, particularly in the run up to the election.
There is optimism that prices would go up but at the same time when newer capacities come in, there will be pressure on prices, correction will happen, says Sanjay Ladiwala, Cement Stockists and Dealers Association of Mumbai. This volatility is likely to continue for the next six months.
CREDAI Chairman Lalit Kumar Jain said cement prices have gone up by about Rs 60-70 per bag across the country in last one week. "We feel that there is a cartel. We are considering moving CCI. We are currently taking legal advice," he added.
According to dealers, cement prices are expected to remain firm in the coming days, which is important to cover the costs as volumes are not supporting and falling continuously due to monsoon arrival in the country, says ICICIdirect.com.