Cement prices have gone up by about ₹80-Rs 100 in Southern markets in the last four weeks. As per our enquiries with cement sellers, the price per a bag of 50kgs of cement, both PPC and OPC categories of different brands, now ranges from ₹360-450 in Chennai, ₹380-450 in Hyderabad , ₹360-430 in Vijayawada/Tirupati. This was about ₹80-100 higher than the prices prevailed in February. “Our supplies are attributing that hike in prices to the increase in crude and coal prices in the wake of Russian-Ukraine crisis and uptake in demand for cement,’‘ Managing Director of a Hyderabad-based real-estate construction company told BusinessLine. There has been an increase in steel prices too from about ₹60,000 per tonne to about ₹80,000 per tonne, he added. 

Subdued demand

The situation in demand and pricing have changed now compared to third quarter. According to Sreekanth Reddy, Joint Managing Director, Sagar Cements, Demand and pricing were expectedly soft during the third quarter owing to external factors. Unseasonal rains, Non-availability of sand in East and the availability of the labour for most part of the last quarter due to the festival season resulted in lower offtake. Pricing trajectory subsequently trended lower, in line with subdued demand.  “However, we witnessed gradual pickup in demand towards the end of the quarter, While the demand and pricing were relatively benign, raw material prices though continued to remain stubborn, in turn impacting the profitability,’‘ he said. in an analyst call.  While it is not uncommon to see a spurt in demand and prices with the onset of the Summer every year, the increase in price started rather early this year and has also been sharp.  The growth in demand for cement is expected to be higher going forward, say analysts. According to a recent Crisil report, higher spends on infrastructure development would be in line with the 26 per cent increase in budgetary allocation for infrastructure in the Union Budget 2021-22.  “That, coupled with pent-up demand in urban housing, will drive volume growth. Demand from hinterland should sustain on the back of higher rural incomes,’‘ Nitesh Jain, Director, Crisil Ratings said.