Days after the Modi 3.0 pushed for affordable housing – both rural and urban – under the Prime Minister Awas Yojana scheme, cement-makers have announced a ₹8-10 per bag price hike anticipating a pick-up in demand, shrugging off the heat-wave and General Election blues.
Incidentally, while price hikes have been announced company-wise and region-wise, they are yet to find acceptance or register positively with dealers, market sources said.
Cement-makers – between April and May – made at least two attempts to implement price hikes of ₹8-10 per bag or more. The first major hike, announced in April, had to be rolled back in view of lower-than-expected demand.
“Price hikes have been announced over the last two-three days, especially after the Cabinet decision to push affordable housing. By the end of this week, or latest by early next week, there will be a clear idea about whether this price rise has registered or not. As of date, demand continues to be below expectation,” a market participant told businessline.
Advancement of monsoons across major parts of India in the coming two-weeks (July 6 onwards) is expected to create further questions on sustainability of these price hikes.
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Earlier this week, hours after taking office for a third consecutive term, Prime Minister Narendra Modi’s new Cabinet announced its first major policy decision to provide assistance for the construction of an additional three crore rural and urban houses (affordable housing) under the Pradhan Mantri Awas Yojana (PMAY).
Market research firm, Motilal Oswal, said average cement price (trade) was flat month-on-month (m-o-m) in May, (and down 4 per cent over Q4-FY24 exit prices).
“However, price hikes of ₹8-10/bag have been announced across regions in June after several failed attempts. We estimate cement volume to grow 5-6 per cent m-o-m, driven by the housing and infrastructure segments,” the firm said in a report, adding that the all-India average cement price in Q1-FY25 (to date) is estimated to be flat on a sequential basis.
So far, domestic pet-coke (a cement making ingredient) price declined 6 per cent m-o-m to ₹12,439/tonne in June; import prices was down 3 per cent m-o-m to $107/tonne.
Region-specific price movement
In some markets, including Rajasthan, Uttar Pradesh in North India and in West Indian regions, non-trade prices are up ₹15-30/bag, thus narrowing the price gap between trade and non-trade, Motilal Oswal said in its report.
In the eastern, western and central regions, price-rise announcements are in the range of ₹10/bag; while in the northern and southern markets, price rise is around ₹8-9/bag.
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“Within regions, cement prices in Q1-FY25 (quarter to date) are likely to be up in the western and central regions by 3 per cent and one per cent q-o-q, respectively. Cement prices are estimated to be down in the northern, eastern and southern regions in the range of 1-2 per cent,” the research firm said.
Market sources say cement demand is estimated to be subdued in the near term due to the advancement of monsoons. However, demand should rebound strongly in H2FY25, supported by housing and infrastructure sectors, metro connectivity projects, slum redevelopment schemes, among others.
Industry volume growth is pegged at 5-6 per cent y-o-y in H1FY25, and 8-9 per cent y-o-y in H2FY25.
