Cement prices decline around 7% in April-January FY25: Ind-Ra
India Ratings and Research (Ind-Ra) in its latest report has said that cement prices declined around 7 per cent year-on-year in April-January FY25, amid weak demand, and increasing competition due to large supply additions by leading companies. It said though prices of cement (a bag of 50 kg) have increased sequentially from November 2024 with construction activities picking up pace following the monsoon and festive season, they remained low year-on-year.
The report said while the prices are likely to improve in the seasonally stronger Q4, large capacity additions are likely to keep the overall pricing environment weak; FY25 is likely to witness a high single-digit decline, the highest in the past decade. It further said the volume ramp-up from some of the acquired capacities that were operating sub-optimally earlier would keep the prices under pressure over the near term. Consolidation continues in the cement sector, where big players such as UltraTech Cement, Adani Cement, Shree Cement, Dalmia Bharat are acquiring small companies, chasing inorganic growth besides brownfield expansions. In 10MFY25, the cement industry saw around 45 million tonne of capacity changing hands across five deals, majority in the southern region. This has increased the share of the top five companies to around 60 per cent, up from around 55 per cent in FY24.
Ind-Ra believes there is still scope for further consolidation in the cement sector in the near-to medium-term, given the presence of small-to-mid-sized companies and the continued race for market share. Moreover, overall performance of the cement industry is expected to remain subdued in FY25 despite a pickup in the current fourth quarter on account of a weaker first half. After the muted growth of 2-3 per cent y-o-y in 1HFY25, cement demand picked up in 3QFY25 and grew at a high single digit. However, the weak H1 restricted the demand growth in 9MFY25 to around 3.5 per cent y-o-y, the lowest in the past six years with only listed entities faring marginally better.
