Cement dealers across India implement gradual price hikes this month, with the most significant increases observed in the southern and eastern markets.

2024-12-11 04:29:57

Cement Prices See Incremental Hikes Across India, Largest Increase in Southern and Eastern Markets

Cement dealers across India have raised prices significantly this month. In western India, prices have increased by ₹5-10 per bag, while northern India has seen hikes of approximately ₹20 per bag. Notably, the southern and eastern markets, which started from a lower price base, witnessed steeper hikes of ₹30-40 per bag, according to industry sources.

The price adjustments follow four to five months of stagnation, which had eroded dealer margins and impacted cement manufacturers' profitability. Dealers attribute the increases to heightened demand from the real estate sector, supported by improved labor availability post-festive season, and growing infrastructure project orders.

Regional Breakdown

In western India, where cement prices are traditionally the highest, dealers have raised prices to ₹350-400 per 50 kg bag. Northern India has also seen price adjustments, with Delhi-based dealers reporting increases of ₹20 per bag, pushing prices to ₹340-395, depending on the brand and quality.

Southern India, where prices are the lowest nationwide, experienced hikes of up to ₹40 per bag, bringing prices to around ₹320 for a 50 kg bag. Similarly, eastern India saw price increases of ₹30 per bag as infrastructure and real estate projects picked up pace after festive disruptions.

"Brands like UltraTech, Ambuja, Dalmia, and Bangur Cement have all raised their prices due to the rise in demand," said a Kolkata-based distributor. "However, it remains uncertain whether these hikes will be fully absorbed by the market."

Market Trends and Challenges

According to a report by InCred Equities, December is expected to see a ₹10-15 per bag price hike across regions. The report indicates that prices may have "bottomed out," with incremental increases anticipated as government capital expenditure improves post-elections and monsoon-related slowdowns.

Despite this, the report cautions against sharp price hikes due to new capacity additions in the market. Major cement players may focus on increasing volumes and market share rather than aggressive price adjustments.

"Labor availability in major cities has improved after festivals like Diwali and Chhath Puja, boosting construction activity in real estate and infrastructure," said a Mumbai-based dealer. "This should help absorb the current price hikes to some extent."

Outlook

Analysts highlight that while price hikes are a positive step, their full absorption remains uncertain. Previous attempts to increase prices, such as in September, were largely unsuccessful. However, with the conclusion of election season and an anticipated rise in government infrastructure spending, prices are expected to stabilize and potentially rise in the fourth quarter of FY25.

"The market is dynamic, and while price absorption looks promising with increased government expenditure, it remains a key area to monitor closely," said Uttam Kumar Srimal, senior equity research analyst at Axis Securities.