Cement price movements in July defy past trend; hikes likely in August

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Emkay Global Financial Services Ltd, average cement prices declined marginally by Rs1 per bag on a month-on-month basis at Rs374 in July 2023 versus average price decline of Rs5-7 in the past three-four years. One cement bag weighs 50 kilograms. “Region-wise, prices have declined by Rs2-3/bag in west and south, Rs6/bag in east, and stood flat in the central region; but, prices improved by Rs6/bag in north on month-on-month basis.

In Q2FY24-TD, panIndia average cement prices broadly stood flat on a quarter-on-quarter basis," added the Emkay report dated 4 August. At a time when input cost pressures are easing and demand is anticipated to remain robust in the run-up to the general elections, stable cement prices offer some relief. “International petroleum coke prices have moved up ~10% from the recent bottom, reflecting an increase in crude oil prices; however, on a year-on-year and quarter-on-quarter basis, prices remain sharply lower," said a Jefferies India report dated 1 August.

International coal prices are mixed recently and sharply lower on a year-on-year and quarter-on-quarter basis. Jefferies analysts expect the full benefit of the energy cost decline till last quarter to reflect in companies' results in the next one-two quarters. The report further added that cement price trend in July 2023 defied the normal declining trend during monsoons, as prices appear flat to slightly positive month-on-month.

Dealer checks by both the brokerages indicate price hikes likely in August. According to Emkay, price hikes could be to the tune of Rs5-10/bag. It remains to be seen whether these price hikes sustain, especially given the chase for volume growth amid rising competitive pressures and huge capacity additions.