Home > Business > Cement prices to dip 1-3 per cent this fiscal despite healthy demand: CRISIL

Cement prices to dip 1-3 per cent this fiscal despite healthy demand: CRISIL


MUMBAI, JUNE 20, 2023

Notwithstanding the healthy demand, cement prices are expected to slip 1-3 per cent this fiscal, after clocking a 4 per cent compound annual growth rate (CAGR) over the past four to a new all-time high of Rs 391 per 50 kg bag last fiscal, a CRISIL Report said on Tuesday.

The run-up was due to disruptions caused by Covid-19, followed by a sharp surge in input costs, especially thermal coal, further aggravated by the Russia-Ukraine war, it added.

The report further said that heightening competitive intensity and softening input costs are set to reverse the trend now.

To be sure, prices have moderated since early 2023 on the back of a gradual softening of energy costs and efforts of manufacturers to gain market share in a seasonally strong fourth quarter. Prices fell 1 per cent to Rs 388 per bag on average in the fourth quarter of last fiscal sequentially, despite manufacturers carrying high-cost inventory. On an on-year basis, though, prices have remained elevated.

The heightened competitive intensity can be gauged from the fact that, for the first time in several years, there were no pre-monsoon price hikes in April and May this fiscal despite steady demand. The push to improve market share is evident from the top five players comprising 55 per cent volume share last fiscal compared with 49 per cent pre-Covid-19.

 “CRISIL MI&A Research expects cement demand growth to be strong at 8-10 per cent on-year this fiscal, the pre-election year. This, however, will not propel prices up. On the contrary, prices are set to decline 2 per cent on-year to Rs 382-385 per bag, pulled lower also by relatively moderate growth in the trade segment,” said Hetal Gandhi, Director – Research, CRISIL Market Intelligence and Analytics.

 “After the highs of $344 per tonne in fiscal 2023, Australian coal prices are forecast to decline to $150-200 per tonne this fiscal. Dated Brent Crude is also expected to correct over 17 per cent in 2023, with diesel prices falling in tandem with crude oil prices in the latter half of the fiscal. Easing coal, petcoke and diesel prices will come as a relief for the cement industry, which was reeling under high costs and deteriorating profitability,” opined Koustav Mazumdar, Associate Director – Research, CRISIL Market Intelligence and Analytics.

About admin

Leave a Reply

Your email address will not be published. Required fields are marked *