India’s Cement Sector Outlook Bright Despite Short-Term Challenges
India’s cement industry is set for a strong future, helped by ongoing housing projects, infrastructure development, and urban expansion. A recent report highlights that the long-term demand for cement remains healthy and promising.
Cement prices across India increased by 7% from August 2023 to August 2024. Last year, the average price was Rs 330 per bag, which rose to Rs 354. The highest point during this period was in November 2023, when prices touched Rs 387 per bag.
However, in August 2024, cement prices dipped slightly by Rs 6 per bag compared to July, mainly due to seasonal slowdown caused by heavy rains and festivals. The eastern regions, especially Patna, faced the biggest drops because of reduced construction activity and subdued demand during the monsoon season.
Experts say that once the monsoon ends, demand is likely to pick up. The festive season usually boosts construction activities, which can improve cement prices later in the year. Still, the next couple of months will be crucial for cement companies to balance increasing costs and rising demand.
Rural areas are expected to see a boost in cement consumption after the monsoon, thanks to increased government spending on infrastructure. Tushar Chaudhari, a research analyst at PL Capital, points out that even though prices stayed steady for a few months, August saw a sharp decline, especially in the eastern parts of India.
Many cement companies are trying to raise prices ahead of possible tax changes (GST rationalisation). But weak demand during festivals might offset these efforts. Additionally, new cement plants coming online could put pressure on maintaining current price levels.
Industry insiders say that repeated announcements of price hikes without actual implementation are causing excess inventory and straining cash flow. While there is hope that a reduction in GST rates could help stabilize prices, the overall demand and capacity expansions pose ongoing challenges for the industry.
In summary, India’s cement sector has a bright future due to steady long-term demand, but short-term hurdles like seasonal slowdowns and capacity additions are affecting current prices. Experts remain optimistic about demand recovery after the monsoon and festive season.
