South India Leads Cement Price Increases as Demand for Real Estate and Infrastructure Expands

Cement dealers in India have started hiking prices this December after months of flat prices, that squeezed margins and hurt bottomlines for manufacturers. Dealers attributed this increase in price to a burgeoning demand from the real estate and infrastructure sector due to better labor availability during the post-festival period when construction activity improved.

In western India, as of now, cement prices, compared with the rest of the nation, are already up among their highest. On Wednesday dealers raised prices another Rs 5-10 on their 50 kg bag size, this pushing the latest prices anywhere in the region between 350/50 kg and 400/50 kg. Dealers in regions where, such as the South, or East, the markets are more or less extremely fragmented, have witnessed even sharper price boosts. In southern India, where prices were the lowest, dealers quoted a price hike of Rs 40 per bag, pushing the cost to around Rs 320 per 50 kg bag. Price hikes of about Rs 30 per bag were also witnessed in eastern India, triggered by renewed paces in infrastructure projects and real estate development following the festive season.

A cement distributor from Kolkata noted that all major brands, including UltraTech, Ambuja, Dalmia, and Bangur Cement, have raised their prices. While demand remains steady, the distributor expressed uncertainty about whether the price hikes will be fully absorbed by the market. In Delhi, prices have gone up by Rs 20 per bag, with prices now ranging between Rs 340 and Rs 395 per bag, depending on the brand and quality.

According to an InCred Equities report, the price hikes for December are expected to be between Rs 10-15 per bag across regions. The report suggests that dealers feel prices have “bottomed out,” and further small hikes may occur as government spending on infrastructure rises in the latter half of FY25. However, the report also warns that large price hikes may be challenging due to new cement capacities coming into the market and major players focusing on increasing their volumes rather than pushing for higher prices.

The full absorption of these price hikes remains uncertain, but analysts expect that with the end of the election season and increased government expenditure, cement prices will likely continue to rise in the coming months.