Making homes may get expensive after upcoming festive season; cement prices likely to rise this much

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Updated: Sep 30, 2020 12:40 PM

The cement manufacturers are likely to hike the price in Q3 FY21 or after the festive seasons.

cement prices, price of cement, houses expensive, infra cost, cement demandRevenue from operations was at Rs 10,354 crore a jump of 7.7% from the previous year when it was at Rs 9,615 crore.

Making houses after the upcoming festive season may get expensive as cement prices are expected to rise. The cement makers are likely to hike prices in Q3 FY21 or after the festive seasons, said Emkay Global Global Financial Services. Cement prices fell by Rs 3-5 per bag across regions in September 2020, with the price gap between trade and non-trade cement remained wide in the North region (Rs 65-90 per bag), the report added. Pan-India average trade prices fell 3.7 per cent in Q2 FY21, with a 2-5 per cent decline, on-quarter, across regions, the report added.

While the demand for cement remained muted in the first two quarters of the current fiscal due to nationwide and regional lockdowns, it is expected to have improved in the North, East, and Central regions. The report indicated the demand growth of 6-8 per cent on-year in the North and Central regions, and volume growth of 2-3 per cent on-year in the East region in September 2020. The growth is mainly seen in Bihar, West Bengal and Jharkhand markets.

However, on the other hand, the demand in the South region remained affected by the heavy monsoon in Kerala, Andhra Pradesh, Telangana, and labour shortage. The demand in the South region is estimated to have declined by  20- 24 per cent on-year in June-August 2020 and 18-20 per cent on-year in the month of September. The falling demand has also engulfed the West region, where the fall is around  15-17 per cent on-year, dragged by a 22-24 per cent drop in Maharashtra. 

What may affect cement prices in Q3?

The coal traders are also reportedly shifted to USA coal as their primary raw material, which isaround 5-7 per cent cheaper than imported pet coke.  However, the sustenance of pet coke prices at high levels may impact operating costs by Rs 54-70 per tonne from the mid of the third quarter. High diesel prices may also lead to an increase in freight costs by Rs 70-100 per tonne. 

Meanwhile, the annual installed capacity of cement in the country is around 510 million tones. Annual cement production during the year 2018-19 was 337.22 million tones resulting in average capacity utilization of around 67 per cent, Piyush goyal, Minister of Commerce and Industry had said in a reply to a question in Lok Sabha earlier this year. 

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