Cement Manufacturers Eye Price Hike in January Amid Construction Activity Surge

Cement makers are contemplating a price hike of ₹7 to ₹10 per bag in January, driven by improving demand and a pick-up in construction activities. The price hikes implemented across key markets in December in northern, central, and eastern India, excluding southern states, have been sustained. These increases, which amounted to ₹7-8 per bag, marked the first instance this fiscal year where cement companies did not roll back announced price hikes or offer additional discounts.

In December, cement prices ranged between ₹365 and ₹368 per tonne, surpassing the November exit price of ₹358-₹360 per bag. A market participant noted that demand remained strong in December, and they expect the momentum to continue into January, providing room for another ₹7-10 per bag price hike. The growth in construction activities, state road projects, and disbursals by state governments have contributed to this uptick.

Looking ahead, an increase in infrastructure spending is anticipated in the upcoming Budget, further boosting demand in the coming year. Since a sharp recovery in the second half of the fiscal year seems out of the question, the back half of FY25 will likely outperform its front half due to the fading high base effect of FY24 and further normalizing construction activities.

Cement, on the other hand, had been growing at 11% CAGR in FY22-24, which was supported by public sector spending on infrastructures and rural development. Growth is expected to slow down to 4.5-5.5% in FY25 due to base effects, seasonal weakness, and short-term disruptions during H1 due to heatwaves and elections.

Forecasting forward, the sector will witness lower growth, with 210-220 million tonne capacity addition expected during FY25-FY29/30, translating to a CAGR of 5.5-6.5%. However, cement prices are expected to remain under pressure during H2, with regional differences- especially in the east, where the prices may correct by 11-12% in FY25.