Cement prices rise Rs 7/bag in September; more hikes expected in October
Cement prices rose by Rs 7 per bag in September, with further hikes of Rs 5-20 expected in October due to rising fuel costs.
The cement industry is bracing for another round of price escalations. Following a moderate increase in September, cement companies are expected to attempt further price hikes ranging from Rs 5 to Rs 20 per bag across most markets in October, according to a recent report by Centrum Broking.
September saw a recovery in pricing momentum
After remaining largely stagnant during the months of July and August, the cement sector witnessed a pickup in pricing momentum this September. The all-India average trade price climbed by Rs 7 per bag month-on-month, reaching an average of Rs 356 per bag.
According to channel checks conducted by Centrum, price gains were observed in both the trade and non-trade segments. Notably, the non-trade segment experienced sharper increases in several markets. However, the full impact of higher company billing rates has not yet reached all customers, as many dealers maintained earlier price points to hit their volume targets for the quarter-end.
Regional breakdown of price increases
The impact of the September price rise was not uniform across the country. Different regions saw varying degrees of escalation:
- South India: Led the surge with an increase of Rs 11 per bag.
- West India: Followed with a rise of Rs 9 per bag.
- Central, East, and North India: Each recorded a steady increase of Rs 5 per bag.
Despite the recovery seen in September, the all-India average trade price for the second quarter of FY27 stood at Rs 351 per bag, reflecting a slight sequential decrease of Rs 1 per bag as the gains in September were offset by the weaker pricing seen in July and August.
Key factors driving future hikes
The report highlights that the ability of cement manufacturers to implement and sustain these upcoming price hikes will be closely monitored. A significant driver is the sharp increase in fuel prices in recent weeks, which puts upward pressure on production costs.
However, the success of the projected October hikes is not guaranteed. Two critical factors will determine the industry's pricing outlook:
- Demand Recovery: The sustainability of higher prices depends heavily on whether market demand picks up sufficiently.
- Dealer Acceptance: Companies will need to ensure that dealers are willing to pass these costs on to the end consumers.
While demand weakness in the second quarter was less severe than typical seasonal trends, regional activity has been heavily influenced by weather patterns. In some areas, higher rainfall has hindered construction activity, while in others, lower rainfall has provided a boost to building projects.