The infrastructure sector accounts for more than 24 percent of cement demand. | Photo: Bloomberg
Brokerage firm Antique has estimated that cement companies will continue to increase prices till mid-November, adding that each bag of cement will cost Rs 10-20 more in most regions from this week, according to a report by CNBC TV-18.
“A similar trend was seen last year when companies implemented an average price hike of Rs 30 per bag post-monsoon till mid-November 2023,” the brokerage firm quoted in the report.
However, the cost curve is likely to continue to decline in the second half of the fiscal year, Antique added, adding that cement demand remains subdued.
“Our channel checks suggest that industry volumes have likely remained broadly flat on a year-on-year basis in the second quarter to date (July-August 2024) on a relatively high and rainy season base. South India likely saw a high single-digit year-on-year decline (similar to the Q1 trend), while the rest of the regions likely saw marginal low single-digit year-on-year growth,” it said.
The brokerage firm added that the low base from September 2024 may result in low double-digit to mid-teens YoY industry volume growth for the remainder of FY25.
In early June, all-India cement prices declined as demand was impacted by the general elections, heatwave conditions and excessive rainfall in some states. According to a report by InCred Equities, all-India cement prices fell by Rs 3-4 per bag (around 1 per cent) month-on-month in May 2024 and by Rs 4-5 (around 1.5 per cent) year-to-date in Q1FY25.
Industry expects cement demand to recover
The infrastructure sector accounts for over 24 percent of cement demand, which is projected to grow at a faster pace, driven primarily by the government’s robust infrastructure development initiatives.
Moreover, with Andhra Pradesh Chief Minister N Chandrababu Naidu announcing that Amaravati will be the state capital, there will be extensive infrastructure development work that will require a huge amount of cement.
Moreover, the housing sector is also gaining momentum as India is transitioning towards becoming a middle-income country and a stable interest rate environment. Not to be forgotten, Modi 3.0 has approved the proposal to provide 30 million additional rural and urban houses under the Pradhan Mantri Awas Yojana (PMAY). This will further help in the recovery of demand, according to industry experts.
First published: August 20, 2024 | 11:20 a.m. IS
Disclaimer:
The information contained in this post is for general information purposes only. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the post for any purpose.
We respect the intellectual property rights of content creators. If you are the owner of any material featured on our website and have concerns about its use, please contact us. We are committed to addressing any copyright issues promptly and will remove any material within 2 days of receiving a request from the rightful owner.