Cement prices showed an uptick in March compared with the previous month. After staying muted for the three months to February, prices in March have risen past the November peak. This may help cement companies to partially offset the impact of higher input costs while helping them to benefit from improving demand.
According to various brokerage reports, based on dealer interactions, the pan India average cement price rose by over 10% to Rs 395 per 50 kg bag as of March 22, 2022, on a month-on-month basis. It grew by 11% based on the year-on-year comparison.
Over the past 12 months, the average price had peaked at Rs 385 per 50 kg in November, which gave cement makers little room to raise prices given the slow pace of awarding and execution of projects and issues related to sand availability. According to sector trackers, prices have started to firm up again in March as the sector enters a seasonally strong period for construction activities. Besides, the pace of awarding road projects by the government has increased. The buoyancy in cement price is expected to reduce the burden of rising raw material costs. Prices of key raw materials such as imported coal and petcoke have increased sharply by 24-50% in the past three months.
Analysts believe that cement consumption will be better in the March quarter compared with the previous quarter. Given the likelihood of higher demand, the full benefit of higher cement prices is expected to reflect in the financial performance of cement companies from the June 2022 quarter.