Cement Prices to Increment by Rs.10-15/Unit this Month

Cement producers across India are gearing up to implement price adjustments of roughly Rs 10-15 per bag this month despite a subdued demand climate in the lead-up to general elections. While certain areas, notably southern India, might witness more significant upticks, industry insiders speculate that increases ranging from Rs 10-20 per bag are poised to be more sustainable.

In the preceding five months, cement prices have exhibited a consistent downward trajectory, resulting in an average decline of 5-6% in prices for the March quarter compared to the preceding December quarter. This trend has been particularly noticeable in eastern and southern India. Despite projections indicating a 6-8% year-on-year expansion in volumes during the January-March period, cement manufacturers have grappled with the challenge of boosting prices.

Kotak Institutional Equities attributes the prevailing price weakness to fierce competition among major players vying for market dominance, compounded by deflationary pressures on costs.

The anticipated price hikes in April may assist cement producers in offsetting some of the adverse impacts of decreased volumes during the quarter. However, analysts stress the significance of the sustainability of these hikes, especially in light of the anticipated lackluster demand due to the impending general elections. Should demand falter, there looms the possibility of either partial or complete reversal of these hikes.

Ravi Sodah, an analyst at Elara Securities, foresees a moderation in demand due to the elections, prompting cement companies to closely monitor prices to safeguard against substantial margin contractions.

Regional variations in price hikes are expected, with southern India forecasted to witness increases in the range of Rs 30-50 per 50 kg bag, while central India may experience hikes of Rs 15-20 per bag. North India is anticipated to see hikes of Rs 10-15 per bag, western India around Rs 20-25 per bag, and eastern regions approximately Rs 30 per bag.