Cement Prices In India Surge Amid Regional Variations

Cement companies in India have witnessed a surprising price surge during September 2023, following relative stability and fluctuations in a few markets in August 2023. Cement prices usually undergo monthly fluctuations, with companies often rolling back price increases if they sense a dip in demand. However, experts suggest that the recent price hike may be short-lived, and the industry remains prone to instability.

Let’s delve into the details of these price hikes, their regional variations, and the factors influencing them. 

Price Increase

The data assessed by OfBusiness highlights the regional disparities in Cement pricing strategies:

• South: The recent Cement price surge has been particularly pronounced in the southern markets, with prices soaring by a staggering Rs 30-35/bag.

• East: The eastern region experienced a substantial price increase of around Rs 20/bag.

• North: In the northern markets, prices have seen a hike ranging from Rs 15 to Rs 20/bag.

• Central & West: Meanwhile, the central and western regions, including Madhya Pradesh, Gujarat, and Maharashtra, witnessed comparatively modest price increases, ranging from Rs 10 to Rs 15/bag.

Demand Dynamics

Here are the details:

• Dull: As of now, demand in the eastern and southern regions of India has been lackluster, contributing to the instability in Cement prices.

• Stable: The central regions have remained relatively stable in terms of demand.

• Robust: Northern and western India have reported robust demand which has provided support for the ongoing price increases. The demand volatility across regions plays a pivotal role in shaping the pricing landscape of the Indian Cement industry.

Price Fluctuations

Cement companies have been attempting to increase prices multiple times this year, with varying degrees of success across different regions.

• North: In North India, during the first quarter of CY23 (January to March), Cement companies managed to implement price hikes of around Rs 10 to Rs 20/bag. The demand for infrastructure and housing projects in states like Rajasthan, Punjab, Haryana, and Uttar Pradesh bolstered these price increases. However, rising input costs, particularly coal prices, continued to exert pressure on profit margins.

• From April onwards, slower construction activity during the scorching summer months led to reduced Cement demand, preventing further significant price rises for the remainder of CY23.

• South: In the south Indian Cement market, states like Tamil Nadu and Karnataka experienced improved construction activity and lower production costs, enabling companies to gradually raise prices by Rs 10 to Rs 20/bag from January to April. Yet, heavy monsoon rains from May to August adversely affected construction activity and Cement dispatch volumes, prompting companies to cut prices to stimulate sales during the lean monsoon period.

• East: In East India, including West Bengal, Bihar, and Odisha, Cement demand remained weak during the first half of 2023. Intense competition among established and newer players hindered major Cement price increases, and most companies could only implement marginal hikes of up to Rs 10 /bag from January to June. It was only from July, with the start of the festive season, that demand gradually improved, allowing more meaningful price rises of around Rs 20 /bag in July and August.

• West: In the western states of Gujarat and Maharashtra, strong demand from infrastructure and housing projects from January to April 2023 allowed Cement manufacturers to raise prices by an average of Rs 20 /bag. However, the onset of monsoons in May led to slowed construction activity and flooding in some areas of Gujarat, resulting in stability in prices due to limited demand. In August, with the easing of monsoon rains, Cement dispatches started to pick up again in West India.

Market Outlook 

Considering the current steady supply and anticipated demand due to the favorable construction season and government initiatives to boost the country’s infrastructure, it seems that Cement prices are likely to remain strong in the coming weeks. However, intense price competition among suppliers and rapid industry expansion appear to be constraints preventing significant price hikes. The Cement industry in India remains a dynamic space, influenced by regional dynamics, economic factors, and seasonal fluctuations.

OFB’s Insight

In September 2023, Indian Cement prices surged, primarily in the southern and eastern regions, driven by varied demand dynamics. The industry’s pricing landscape remains susceptible to regional disparities and market fluctuations, making it imperative for stakeholders to closely track evolving trends.