Concrete

Cement demand bounces back

Published

4 years ago

February 1, 2022

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With the onset of the final quarter of FY22, CareEdge expects cement prices to trend higher due to pick up in the overall construction activities giving a boost to cement demand. CareEdge (CARE Group) is a knowledge-based analytical group and is one of the leading credit rating agencies in India.

After gaining pace in October 2021, the demand offtake fell unexpectedly in November 2021 owing to construction bans in the Delhi NCR region, late and unseasonal rains in the South, availability issues of sand mining in the East and Uttar Pradesh and labour unavailability. Major slump was witnessed in the Eastern and Southern regions. Later, the demand picked up during December 2021 and has been firming up further during January 2022. Demand rebound in Q4 should bolster cost pass-through for the industry. This, coupled with the fact that the key cost-side elements (coal/pet coke/diesel) have softened from the higher levels have alleviated concerns of a further increase in the operating costs for the industry.

Though higher input costs will continue to impact the players in Q4FY22 due to the build-up of high-cost inventories, this should, thereafter, subside more in Q1FY23 assuming current trends in input costs. Therefore, margins of cement players are expected to bottom out in Q3FY22 and improve thereafter at the back of potential price hikes and waning cost pressures. Further to the earlier report dated October 28, 2021 (Cement Sector: Battling the cost wave), CareEdge reiterates that the macros of the cement industry continue to remain positive and the industry is expected to witness a robust mid-teen growth in overall cement demand in FY22 and thereafter 6%-7% Yo-Y in FY23. The demand is mainly driven by recovery of activity in the urban housing sectors, upcoming general elections in 2024, infrastructure projects as well as rural demand and renewed real estate demand. However, any potential halt on the construction activities amidst upsurge of infections pertaining to the third wave of Covid-19 shall remain a key monitorable for the growth in the coming months.

Demand momentum continues

The cement industry is expected to be benefitted by high volume growth, majorly driven by revival in demand from the urban housing sectors, upcoming infrastructure projects such as construction of roads, railways, highways as well as generous rural demand. The long-term drivers of demand such as National Infrastructure Protection Plan, Bharatmala projects, mission ‘Housing for All’, rapid urbanisation, rising rural incomes remain strong with increased government impetus on infrastructure projects amid the upcoming elections in 2024. While a decent demand and volume expansion was witnessed in the first seven months of FY22, the months of November and December saw muted growth mainly due to factors, including construction ban in the NCR, heavy rainfall in the South and few Northern states and issues related to availability of sand in the Eastern region and UP.

Production of cement fell by 3.3% in November 2021 year-on-year; however, the cumulative cement production index increased by around 29% during April to November 2021 over the corresponding period of the previous year. Nevertheless, some recovery has thereafter taken place in the second half of December month,which is a significant month for the sector, as it marks the onset of peak construction period. Furthermore, historically, cement demand in January has been 4% higher than December.

With the strong demand momentum to sustain, the credit outlook for the cement sector is expected to remain positive. However, any potential halt on the construction activities amidst upsurge of infections pertaining to the third wave of Covid-19 shall remain a key monitorable for the growth in the coming months. With healthy growth in volumes coupled with stronger balance sheets, many cement players have planned capacity additions to maintain their market shares. CareEdge expects capacity additions of about 100-110 MT between FY22 and FY25. The third wave of Covid-19 may put some temporary breaks on the expansion plans of players. Nevertheless, the pace of expansion and demand matching up with the same shall be a key monitorable for the sector.

Input Costs

The average fuel cost for the industry has increased by Rs 250-300 per tonne in H2FY22. There has been a decline in imported coal, pet coke and diesel prices in the last two months from their earlier peak levels, alleviating concerns of any further steep increase in the operating costs for the players. Although the fuel cost for the industry is believed to have peaked in Q3FY22, it would remain at slightly elevated levels for the players due to high-cost inventories in Q4FY22. Full benefits of fall in fuel prices are expected to start accruing from Q1FY23.

• Australian coal prices have fallen to USD 162-169 per tonne as in January 2022 from its peak of USD 224 per tonne in October 2021.

• Pet coke prices which move in tandem with crude oil prices fell to USD 150 per tonne in January 2022 from its peak of USD 200-220 per tonne in November 2021. The prices of domestic pet coke have increased from Rs 9,135/MT in December 2020 to Rs 20,781/MT in November 2021, and they declined in December 2021 with average price of Rs15,680/MT which is still 72% higher Y-o-Y.

Realisations: Expected to stay strong

The previous attempt by the cement players to hike the prices in October 2021 could not last long and these hikes were rolled back due to lack of demand in November 2021. With expected volume growth going forward, the industry is again poised to take price hikes. The price hikes are required to pass on the increased cost pressures as imported coal/pet coke and diesel prices, though lowered from previous high, remain elevated.

The month of October 2021 saw Rs 20-30/bag price hikes across regions, but these were partially rolled back in November-December 2021. Pan India prices seem up around 1% in Q3FY22 Q-o-Q led primarily by price rise in Northern, Central and Western regions but partially offset by Q-o-Q fall in prices in the Eastern and Southern regions. In FY22 on a Y-o-Y basis, pan India prices are likely to remain up around 4%-5%. With pickup in demand, companies are expected to announce price hikes in the range of Rs.10-25 per bag across regions for the month of January 2022.

Demand momentum should keep pace for the price hikes to sustain, and any potential halt on the construction activities amidst upsurge of infections pertaining to a possible third wave of Covid-19 affecting cement demand shall be key.

Due to the cost upsurge until November 2021 coupled with the roll back of the price hikes (earlier announced in October 2021) in the cement prices in Q3FY22, the EBITDA margins for the quarter ending December 2021 is likely to bottom out, though margins are expected to recover partially in Q4FY22 with the likely price hikes to be taken by players.

In the present circumstances where the sector is grappling with the higher input cost, a sustained increase of prices along with demand stand critical for the operational performance of the players in the near term. Going forward, CareEdge expects cement prices to trend higher in Q4FY22 due to a pickup in the overall construction activities, leading to a higher cement demand.

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Cement Prices To Hold Steady Amid Monsoon Slump

Centrum report says demand weakness will limit hikes

Published

4 hours ago

July 6, 2026

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Centrum, a financial services firm, has reported that cement prices are likely to remain largely unchanged in July as weak demand during the monsoon season constrains pricing power. The report noted that construction activity remained subdued in the first quarter of fiscal year 2027 owing to labour shortages and slower execution of government projects. While June showed some volume recovery driven by delayed monsoons and quarter end sales, dealers are cautious about sustaining any price increases.

The analysis suggested that seasonal slowdown related to monsoon will prolong demand and pricing challenges through the second quarter. Dealers saw most recent attempts at price hikes as protective measures rather than genuine shifts in market fundamentals. They signalled that pockets of demand in select regions could prompt isolated adjustments but that broad based increases were unlikely while construction activity remained weak. Market participants therefore expected a cautious stance on pricing.

The report highlighted that despite intermittent recovery in shipments during June, the underlying demand trajectory remained muted as monsoon hampered site level activity and logistics. Commercial builders and retail dealers both reported constrained order books and slower payment cycles, which in turn reduced room for margin expansion among manufacturers. Analysts noted that unless government project execution accelerates markedly, demand improvement would be gradual. Price setters were thus likely to focus on protecting market shares rather than pursuing aggressive increases.

Market watchers said the near term outlook would be shaped by monsoon progress and fiscal spending patterns, with any acceleration in public works offering the most tangible support. Traders expected that regional variations would persist and that trade flows between surplus and deficit centres would determine local price movements. The report concluded that stakeholders should prepare for a period of subdued pricing until demand signals strengthen.

Concrete

Cement Prices Set To Stay Under Pressure In July

Monsoon and weak demand keep prices under strain

Published

4 hours ago

July 6, 2026

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A report by Centrum said cement prices are expected to remain largely flat in July as the monsoon and weak demand weigh on the sector. The report said demand during the first quarter of FY27 remained range-bound and below expectations, with dealers across markets pointing to subdued construction activity, labour shortages, elections, heatwaves and slower execution of government projects as key reasons. It noted that some recovery was witnessed in June due to delayed onset of the monsoon and quarter-end volume push.\n\nDealers across most markets do not expect any meaningful price increases in July, the report said, adding that attempts to raise prices in some markets are aimed at defending existing levels rather than achieving significant gains. The sharp correction following the rollback of April hikes has largely played out across most regions, limiting scope for further immediate increases. Seasonal slowdown in construction activity during the monsoon is expected to continue affecting demand and pricing in the coming months.\n\nCentrum indicated that pricing pressure is likely to persist through the second quarter of FY27 as monsoon-related softness continues. Dealers remain cautious about sustainability of any price rise attempts and do not rule out further weakness during the peak monsoon period. The combination of subdued demand and seasonal factors is likely to constrain the industry’s ability to raise prices in the near term. While June saw some improvement in volumes because of delayed rains and quarter-end sales efforts, the broader demand environment remains challenging.\n\nCement companies are therefore expected to focus on maintaining current price levels rather than pursuing aggressive increases as the sector navigates weak demand and seasonal headwinds. The report suggested that unless demand conditions improve significantly, limited scope will exist for meaningful price recovery. Market participants remain watchful for any shifts in execution of infrastructure projects or construction activity that could alter the outlook.

Concrete

TARIL Secures Ultra Mega Transformer Order From PGCIL

Order for manufacturing transformers to be delivered in 30 months

Published

4 hours ago

July 6, 2026

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Transformers and Rectifiers (India) Limited has received Notifications of Awards from Power Grid Corporation of India Limited (PGCIL) for multiple contracts to manufacture transformers and undertake associated works. The company submitted the disclosure to BSE and the National Stock Exchange under Regulation 30 of the SEBI Listing Regulations. The submission cited security code 532928 and trading symbol TARIL, and the filings cite the award reference and confirm execution in accordance with the terms and conditions stipulated in the notifications.

The contracts are described as an Ultra Mega Order under the company classification, indicating a value at or above Rs 10 billion (bn) on conversion. The filing identifies the contracts as domestic orders and specifies a scheduled delivery period of 30 months. The scope covers manufacturing of transformers of various ratings together with all associated work. The order size places it in the highest project classification defined in the company’s disclosure.

The disclosure states that the promoter group and group companies have no interest in the awarding entity and that the contracts do not constitute related party transactions. The company noted that the awards will be executed in the normal course of business and not fall within related party transactions. The document reiterates that the company is committed to delivering high quality products and services and has established itself as a leading manufacturer of transformers in the country over time.

Chief Financial Officer Mehul Shah authorised the filing and requested the exchanges to take the information on record, with the company providing the requisite filing reference in its submission. The company indicated that the orders will be executed as per the notifications of awards and the applicable regulatory framework. The original filing is available on the stock exchange portal at the provided link.