HomeNewsElevated cement price is affecting demand in some regions

Elevated cement price is affecting demand in some regions

Continued increase in cement price may affect the demand for the commodity in May and may force the industry to rollback the price hikes. The cement manufacturers have gone for another hike in May which is in the range of 10-35 in various regions.

However, continued price hike may be resisted by the buyers, especially independent home owners. According to dealers, resistance to price hikes is more in North and South while in other regions it has not affected much. Also, continued heat waves in North and Central India is affecting the construction activity which in turn may affect the demand. Also, in North and Central regions the construction sector is witnessing labour shortage as migrant workers have gone back to their native villages for their Rabi harvesting.

Industry is also unable to maintain the increased price in South and West due to production indiscipline among the manufacturers. As a result, ‘hike and then rollback’ has become a common feature of the industry in these regions in recent months.

April saw Rs 10-50 per bag hike in various markets and interestingly, there was not much rollback this time. As a result, cement prices touched an all time high of Rs 402/bag.

Input costs (coal/ imported petcoke) have increased by 60-70% in the past few months due to an unfavourable geopolitical scenario. Additionally, diesel prices rose 10% from mid March 2022. Accordingly, variable cost/ton is likely to remain elevated in the first half of current fiscal. Continuation of current elevated input prices may result in Rs600/ton (Rs40/bag) cost increase for the industry.

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