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India
Cement prices and volumes are expected to rise in the coming months, driven by improved demand and a favorable base, according to a recent report by Nuvama Research. The report highlighted a positive shift in the outlook for the cement sector, with both prices and volumes likely to see an upward trend. It said, “We believe the outlook is improving for the cement space as both volumes and prices are likely to record an uptick going ahead, aided by a low base of FY25E.” The report also noted that cement prices in April 2025 have increased across all regions of India.
Regional Price Surge
In April 2025, cement prices surged across various regions, with the southern region leading the price hike, followed by the eastern, central, northern, and western regions. The price increase came on the back of stronger demand, particularly supported by capital expenditure (capex) from central and state governments, as well as Central Public Sector Enterprises (CPSEs). Dealers, however, expect some of the recent price hikes to be rolled back toward the end of the month. This anticipated rollback is driven by the typical fluctuations in demand and price sensitivity in the market.
Government Expenditure Drives Demand
The rise in cement prices has been largely supported by the uptick in demand, which is primarily driven by increased government spending. The report pointed out that central government capex, which was down 12% year-on-year in the first eight months of FY25, has recovered, showing a 1% increase in the first eleven months. Similarly, CPSE capex, which had declined 10% in the first eight months, remained flat for the entire year. State government spending has also shown signs of recovery, further bolstering cement demand across the country.
Volume Growth Projections for FY25
The report anticipates a volume growth of 7-8% for the cement industry in the fourth quarter of FY25. However, the growth for the entire year is expected to be slower at 4-5%. This moderation in volume growth is attributed to factors such as the general elections, a slowdown in construction activity, and a high base from the previous year. In FY24, the cement industry posted a strong volume growth of around 9% year-on-year. A similar pattern was observed in FY20, the year after the last general elections, when cement volumes declined by nearly 1% following a 13% growth in FY19.
Long-Term Outlook for the Cement Sector
Despite short-term challenges, the long-term outlook for the cement sector appears positive. A stable demand environment, coupled with rising prices, is expected to support growth in the coming months and years. The recovery in government spending, both at the central and state levels, will continue to play a key role in driving cement demand and supporting the sector’s growth trajectory.
(With Inputs From ANI)
