Cement-makers are considering a price hike of ₹ 7 to ₹10 per bag, on average, across the country in January. They are banking on sustained improvement in demand and the pick-up in construction activities this month.

Price hikes announced in December across key markets in North, Central and East India — excluding southern states — have sustained. These hikes, amounting to ₹7–8 per bag on a pan-India basis, marked the first time in the current fiscal that cement makers did not roll back the announced increases or offer additional discounts.

Prices this month varied in the ₹365-368 per tonne range, higher than the November exit price of ₹358—360 per bag.

“December demand is good and we are hoping that it’ll sustain even in January. So there is scope for another ₹7–10 per bag price hike next month. Construction activities, work on State-roads, disbursals by State governments are witnessing some uptake,” a market participant told businessline.

According to the participant, infra-spending boost is expected in the upcoming Budget too, with demand conditions sustaining further during the coming year.

“So H2 (Oct–Mar) will not see the hockey stick-type recovery that everyone is anticipating. But Dec–Mar will be better than earlier part of the fiscal. The high base-effect of FY24 is moderating out, stability in construction activities and State governments getting in to the act will make FY26 (demand post-March 2025) promising,” they added.

Positive outlook

Cement demand, which logged healthy compound annual growth rate (CAGR) of 11 per cent between FY22 and FY24 backed by spending on infrastructure and rural development has lost steam, with the fiscal (FY25) expecting a 4.5–5.5 per cent growth, as per research firm, Crisil. Demand was weighed down by base effect, seasonal weakness, and deceleration in construction activity during the first half — extended heatwave and labour unavailability during elections.

“…the second half is expected to see a revival in rural demand and an improvement in government spending (on infrastructure) to meet budget targets,” it further added.

Companies added 101 million tonne (mt) capacity in the last two fiscal years and 210-220 mt is likely to come on-stream between FY25 and FY29/30, implying a 5.5–6.5 per cent CAGR.

Realisation will be lower and operating margins are expected to hover in 15–16 per cent range, lower than previous years.

Price Movements

Prices clocked a 5 per cent-odd CAGR between FY20 and FY23, and hit an all time high of ₹391 per bag (of 50kg). In FY24, there was drop of 2 per cent y-o-y to ₹384 per bag.

With demand growth moderating and rising competitive intensity, prices are likely to continue under-pressure and drop 5-6 per cent.

“There wont be any runaway buoyancy in H2,” another market participant said, adding that the general mood is that of “cautious optimism”.

Regional variations in price movements are expected to continue.

Prices in North India are likely to be range-bound while West has a flattish trend and Central India could see some dip on a full-year basis.

“The eastern region would be the most affected with 11-12 per cent slide likely in FY25 (after a 3 per cent fall) because of increased effective capacity (30 mt addition in two years). In the south, cement prices are set to decline 5-6 per cent after slipping 4 per cent last fiscal….” Crisil said in its report.