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The infrastructure sector accounts for more than 24 per cent of cement demand. | Photo: Bloomberg
Brokerage firm Antique has estimated that cement companies will continue to raise prices until mid-November, adding that each bag of cement will cost Rs 10 to Rs 20 more across most regions from this week, according to a report by CNBC TV-18.
“A similar trend was observed last year when companies implemented an average price hike of Rs 30 per bag post-monsoon until mid-November 2023,” the brokerage firm was quoted in the report.
However, the cost curve is likely to continue sliding downward in the second half of the financial year, Antique added. It further mentioned that demand for cement remains muted.
“Our channel checks suggest that industry volumes have likely remained largely flat year-on-year in the second quarter to date (July-August 2024) on a relatively high base and monsoon. South India likely experienced a high single-digit year-on-year decline (similar to the first-quarter 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 year-on-year industry volume growth for the rest of FY25.
Earlier in June, pan-India prices of cement declined as demand was impacted by the general elections, heatwave conditions, and excessive rainfall in some states. According to a report by InCred Equities, pan-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) to date in the first quarter of FY25.
Industry expects demand for cement to recover
The infrastructure sector accounts for more than 24 per cent of cement demand, which is forecast to grow at a higher pace, primarily fueled by the government’s robust infrastructure development initiatives.
Additionally, with Andhra Pradesh’s Chief Minister N Chandrababu Naidu announcing that Amaravati would be the state capital, there will be extensive infrastructural development work, requiring a huge amount of cement.
Moreover, the housing sector is also gaining momentum, with India transitioning towards becoming a middle-income country and a stable lending rate environment. Not to forget, Modi 3.0 has approved the proposal to provide 3 crore additional rural and urban houses under the Pradhan Mantri Awas Yojana (PMAY). This will further help the demand recovery, according to industry experts.
First Published: Aug 20 2024 | 11:20 AM IST
