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Informist, Tuesday, Dec. 3, 2024

 

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--Sources: Cement cos considering price hike of INR 30-INR 50 per 50-kg bag
--Sources: Cement cos mulling price hike across India, decision likely Tue
--Sources: Price hike by cement cos to reduce pressure on margins, ops cost
--Sources: UltraTech, ACC, Ambuja Cements, India Cements to up prices
--Sources: Dalmia Bharat, Shree Cement, Orient Cement to up prices
--Sources: NCL Ind, Sagar Cements, Ramco Cements, Chettinad to up prices
--Dealers: Market will not absorb cement price hike
--Dealers: Price hike attempts by cement cos unlikely to sustain
--Dealers: Weak demand likely to limit cement cos' price hike plans
--Dealers: Demand for cement across states muted as of now
--Dealers: Cement prices expected to be at current levels for next 6 mos

 

By Narayana Krishna and Sunil Raghu

 

HYDERABAD/AHMEDABAD - Cement companies across the country are considering a price hike of INR 30-INR 50 per 50-kg bag and a decision on this will be taken Tuesday, multiple sources in the industry told Informist. Currently, the average price of a 50-kg cement bag in the southern region is in the range of INR 250 to INR 320, while prices in northern and eastern markets are INR 310-INR 350, depending on the brand and location, dealers said.

 

Cement companies, including UltraTech Cement, ACC, Ambuja Cements, India Cements, Orient Cement, Chettinad Cement, Dalmia Bharat, Sagar Cements, Shree Cement, JK Lakshmi Cement, Ramco Cements, and NCL Industries, are planning to increase prices, the sources said. Despite resistance from dealers, these companies are determined to hike prices as they are worried about increasing fuel and other operational costs, besides the pressure on margins, the sources said. In October, these companies had attempted a price hike of INR 20-INR 30, but failed as the market didn't absorb the hike.

 

"We have to take a price hike. We need more than an INR 30-INR 50 hike to protect our margins. Otherwise, we have to face another quarter of weak financials," said the head of a large cement manufacturing company based in Hyderabad.

 

The price hike being considered is primarily to maintain margins, said a source in the Adani group's cement business, which controls ACC and Ambuja Cements. 

 

However, sustaining the price hike might be a challenge, as dealers from southern states are reluctant to implement it, citing weak demand for the commodity. Unseasonal rains, muted construction activity, and a fall in institutional sales are the key reasons why prices are under pressure, said a cement dealer in Chennai.

 

"We are not keen to implement the price hike as there is no improvement in volumes. If companies increase prices without considering the market reality, it will increase stress on dealers as inventory may pile up. Capital is another issue," said Amar Chowdary, proprietor of multi-brand cement dealership firm Amar Electricals in Hyderabad. Chowdary said cement prices in most regions have fallen by INR 5-INR 10 since October due to weak demand.

 

Dealers in Andhra Pradesh and Telangana, too, don't expect the price hike to be passed on to customers, as volumes are subdued. In Karnataka as well, dealers expect prices to remain at current levels, though a slight improvement in demand has been seen due to increased construction activity and a rise in new projects. 

 

Muthuraman, owner of a Chennai-based multi-brand cement dealership, said a price hike is unlikely in the next six months, given the current demand. Unseasonal rains and slower construction activity in the state were the key factors behind the weak demand for cement, he said.

 

In Gujarat, cement makers expect a price hike of up to INR 30 on an average, said Shailesh Joshi, chief marketing officer of Unity Cements, a large cement dealer based in Ahmedabad. "Generally, December is the best time for cement companies to increase prices to protect their margins. This time also, they are trying," he said.

 

Joshi said average cement sales volumes in the state were 2.4 million tonnes per month in Apr-Sept, almost flat on year. While there were no capacity constraints, logistics was an area in which cement companies were facing hurdles, he said, adding that higher freight costs were impacting their volumes and margins. On an average, cement prices were at INR 290 to INR 315 in Gujarat in the last week of November, he said.  End

 

Edited by Avishek Dutta

 

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