Cement manufacturers have announced price hike of Rs 10-60 per 50-kg bag in April. Extent of price hike varies from region to region. The price hike in April follows a sharp fall in the price in March. It is estimated that all-India average prices of cement at end-March were down 4% YoY.
Price hike in April has not surprised the user industry as they were expecting a hike in cement price in April. Cement dealers say that price hike was warranted due to continued rise in the costs. However, cement experts suspect whether the industry will be able to sustain such hikes going forward. Also, it is rumoured that informal cartel in the industry is losing its discipline. Further, substantial rise in cement price in FY 18-19 is ruled out as capacity addition will pick up pace in the second half of the financial year.
Sharp price fall in March came after two months of almost flattish price trend in January and February. It is said that in March most of the cement manufacturers chased volume growth in March due to year-end target concerns. According to informal channels, price cut was started by UltraTech Cement to ramp up volume of its recently acquired JP Associates plants. Soon other manufacturers too followed the suit and there was a general dip in cement prices across the regions. Price cuts helped to push up volume in March which saw a growth of 6-7% which is considered healthy. Though final confirmation is yet to be received, FY 2017-18 is likely to register one of the highest volume growths in recent years.