Cement companies hike prices amid low demand

28 Sep 2023 , 12:00 PM

Cement makers have hiked prices by 12-13% in the last month due to growing input costs, despite the fact that post-monsoon demand has yet to improve. Sector watchers regard this as a brave step, given cement makers have been cautious in setting prices in recent months.

The all-India average cement price has risen dramatically, reaching Rs 382 per 50 kg bag. The eastern region saw the greatest increase, with prices rising to Rs 400 from Rs 326. 

Historically, demand for cement in the September quarter has been low due to a lack of construction activity during the monsoon season. In general, cement companies slashed prices as soon as their sales volume is impacted by poor demand.

As a result, the decision to boost prices despite poor volume offtake is exceptional. Some analysts link this to the prospect of establishing a higher pricing base ahead of time in order to capitalize on a demand recovery once the monsoon season is finished.

Furthermore, prices have risen at a time when raw material costs have begun to rise again.

Considering these factors, large cement businesses with a strong market presence and robust balance sheets, such as Ultratech Cement, Ambuja Cements, and Shree Cement, are anticipated to profit in the coming quarters.

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