The onset of the south-west monsoon, coupled with a slowdown in real estate activity and labour shortages, has dampened cement demand and prices, even as rising operational costs continue to weigh on the sector, according to an article in The Hindu Business Line.
Price Declines and Regional Trends
Following a price hike of ₹12 per 50 kg bag in April, all-India cement prices have declined by ₹3–5 per bag to an average of ₹356, according to industry sources cited by the article. The decline was led by a fall of ₹5 per bag in the East, ₹4 per bag in the South, and ₹3 per bag in the North. Prices in the Central and Western regions remained largely stable despite weak demand.
| Region | Price Change (₹ per bag) |
|---|---|
| East | -5 |
| South | -4 |
| North | -3 |
| Central | Stable |
| West | Stable |
Cost and Margin Pressures
The recent rise in petrol and diesel prices by ₹7.5 per litre is expected to significantly impact cement companies, as the industry relies heavily on road transport for raw materials and finished goods. Ashutosh Murarka, Cement Analyst at Choice Institutional Equities, said, “Margin pressure is expected to persist through June and September quarter with the industry facing an estimated cost increase of ₹350–400 a tonne, driven by higher fuel, freight and packaging expenses.” He added that in the absence of meaningful price hikes, this elevated cost base is expected to compress EBITDA per tonne and weigh on profitability over the near term.
Ravi Sodah, Research Analyst at Elara Capital, noted that the industry has entered its seasonally weak phase amid a volatile operating environment, with the monsoon emerging as a key headwind for construction activity and cement offtake.
Demand Outlook and Analyst Views
Despite a slight delay in the monsoon, construction labourers have returned to their villages to prepare agricultural fields, leading to workforce shortages at construction sites. Manish Valecha, Co-head of Research at Anand Rathi Institutional Equity, said, “Though monsoon was a little late this time, cement demand is expected to remain seasonally weak due to monsoon-related disruptions in housing and infrastructure construction.” He added that prices continue to face downward pressure amid weak demand, driven by labour shortages, poor agricultural output, a slowdown in real estate, and subdued consumer sentiment influenced by geopolitical tension.
Saurabh Jain, Head of Fundamental Research at SMC Global Securities Cement, said, “Demand is likely to remain subdued during the next two months due to monsoon-led disruptions, though the slowdown is not structural.” On the cost front, logistics expenses may rise temporarily due to weather-related disruptions, while fuel and raw material costs are expected to remain largely stable, offering some relief to margins.
While FY27 industry volumes are expected to grow 6–7 per cent year-on-year, supported by infrastructure and housing demand, near-term profitability remains under pressure due to capacity addition of 40 MTPA and persistent cost inflation of ₹350–400/tonne, according to Murarka. Ravi Sodah added that a meaningful recovery in demand is likely only in the post-monsoon period, with pricing power expected to remain constrained in the near term.
