Cement demand is expected to see an improvement in December, as compared to a 4-5 per cent decline in November when festivals (when construction activities stop) and labour unavailability dragged down consumption. 

Analysts and major players suggest cement demand was subdued in November 2023, down 4-5 per cent in volume terms y-o-y. The high base effect of last year also played a part. 

 “We expect industry volume to grow 6-7 per cent y-o-y in Q3FY24, likely supported by a pick-up in demand in December,” Motilal Oswal said in a report. 

Industry volume grew 11.5 per cent y-o-y in 1HFY24. 

“We estimate volume growth of 8-9 per cent y-o-y in FY24, implying 6 per cent volume growth in 2HFY24,” the report added. 

According to Sandip Ghose, MD and CEO,  Birla Corporation, demand growth in FY24 has been on expected lines albeit with aberrations in some months that got corrected in the following month. 

For example, while the industry saw a strong August, September saw a dip due to seasonal factors. Similarly, after a bumper October, November saw a dip due not only to festivals and labour but also disruptions due to the state elections. 

“But, with those factors behind us, one expects to see buoyant demand in December-January, aided by the tailwind of pre-Lok Sabha election spending in Infra and Development projects like PMAY. Only dampener can be the weather in December,” Ghose told businessline.

Impact of curbs due to pollution norms is also expected to be regional market specific, say sources. 

A strong pipeline of infrastructure projects, and improved housing demand in West India, are seen as major reasons for buoyant demand conditions. 

BJPs victory in the Hindi heartland will propel expenditure projects. 

Price movements

Price hikes of earlier months were reportedly rolled back with festive season discounts playing out in November. 

Analysts say that the country’s average cement price was down 1 - 2 per cent m-o-m last month, but up 5 per cent quarter-to-date. However; while the roll-back in prices is partial (nearly 50 per cent of the hike) in east and south India; in other regions, prices are back to their pre-hike levels (of Sep-23). 

Against a pan-India price of ₹400 / bag in October, and around ₹395 / bag in September, the price in November hovered at around ₹395-397 / bag. 

The average price per 50 kg bag was down ₹7-odd, due to price declines across most regions, except in the West. 

Regionally, Eastern markers saw a 4 per cent -odd decline (₹10-15/ bag) followed by Central which was down 3 per cent (₹ 10/ bag) and by 2 per cent  (₹8-10 / bag) and one per cent (₹5 / bag) in South and North Indian markets. 

In the East, dealers have indicated prices may further drop in the near term due to a slow pick-up in demand and higher competitive intensity,” ICICI Securities said in a report. 

“Pan-India there is unlikely to be any major price rise since companies may not want to sacrifice volumes in a historically good quarter,” Ghose of Birla Corp said. 

Raw material price movement 

Market sources say, imported pet coke prices continue to be range bound, around $125 - 130 / tonne; which gives very little margin of scope for a price rise. However, November did see a price rise of 3 per cent m-o-m to $132/tonne, which may play out in January prices. 

 The imported coal (South African) price declined by 19 per cent m-o-m to $ 108 per tonne. Average imported coal price declined 13 per cent m-o-m to $113/tonne last month. 

“At spot prices, consumption cost stands at ₹1.55/Kcal (imported petcoke ) and ₹1.60/Kcal (imported coal).

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