Chart of the week: Cement prices in downtrend; down 5.5% versus Q3 average

13 Mar 2024 , 02:36 PM

 

Source: Industry, IIFL Research

All India average cement price fell by 2.8% MoM or by ₹10 per 50-kg bag in February 2024. This is on top of the 2.3% decline seen in January 2024. Cement prices have been on a declining trend since November 2023; and thus, Q4FY24 average price is down 5.5% QoQ. Prices fell across regions with highest decline seen in Western region (~3.7% MoM), followed by East and South markets (3.5-3%); and least decline was seen in Central and North India (down ~2% MoM). In Q4 so far, analysts at IIFL Capital Services note that the all-India average price is 5.5% or by ₹20/bag lower than Q3 average prices, as subdued demand and focus on market share gains kept prices weak. Regionally, the highest fall is seen in South and East markets – down ~8-9% QoQ; whereas prices in other regions are down 3-4% QoQ.

Moving into March 2024; cement companies are yet to announce any price hikes, per channel check feedback. Further, dealers indicate pricing woes to continue in March 2024; given the companies’ impetus on driving volumes to achieve year-end targets.

Demand in February 2024 has improved as the month progressed – with many dealers indicating MoM growth in volumes; partly aided by lower base. However, on an overall basis, volume pickup has been slower than expected. While dealers expect MoM volume growth in March 2024; they reiterated cautious outlook in near term given slowdown in construction activity (labor unavailability, delay in government projects, etc.) in run-up to general elections.

Analysts at IIFL Capital Services remain positive on UltraTech, Dalmia Bharat and JK Lakshmi.

Cement price summary

Avg. price per 50-kg bag (₹)	South	East	North	West	Central	All-India
Q4FY23	333	327	345	371	326	340
Q3FY24	351	349	366	380	334	356
Q4FY24- QTD	323	318	354	366	321	336
QoQ change (%)	(7.9)	(8.9)	(3.3)	(3.6)	(4.1)	(5.5)
YoY change (%)	(2.8)	(2.8)	2.5	(1.3)	(1.7)	(1.2)