Cement costs declined round 7 per cent year-on-year in April-January FY25, amid weak demand, and rising competitors as a consequence of massive provide additions by main corporations, in keeping with a report by ranking company Ind-Ra.
Although costs of cement (a bag of fifty kg) have elevated sequentially from November 2024 with building actions selecting up tempo following the monsoon and festive season, they remaind low year-on-year, it stated.
“Whereas the costs are probably to enhance within the seasonally stronger This fall, massive capability additions are more likely to hold the general pricing setting weak; FY25 is more likely to witness a excessive single-digit decline – the very best previously decade,” it stated.
It additional stated the quantity ramp-up from a number of the acquired capacities that have been working sub-optimally earlier would hold the costs below stress over the close to time period.
Consolidation continues within the cement sector, the place massive gamers similar to UltraTech Cement, Adani Cement, Shree Cement, Dalmia Bharat are buying small corporations, chasing inorganic progress apart from brownfield expansions.
“In 10MFY25, the cement trade noticed round 45 million tonne of capability altering palms throughout 5 offers, majority within the southern area. This has elevated the share of the highest 5 corporations to round 60 per cent, up from round 55 per cent in FY24,” it added.
In January 2025, Nuvoco Vistas Corp, the constructing supplies division of the Nirma Group, emerged because the profitable decision applicant for Gujarat-based Vadraj Cement.
Aditya Birla group’s flagship agency UltraTech Cement accomplished the acquisition of India Cements in December 2024 and likewise made a non-controlling monetary funding in Star Cements in that month, buying an 8.42 per cent shareholding.
“Ind-Ra believes there may be nonetheless scope for additional consolidation within the cement sector within the near-to medium-term, given the presence of small-to-mid-sized corporations and the continued race for market share,” it stated.
Furthermore, general efficiency of the cement trade is predicted to “stay subdued in FY25” regardless of a pickup within the present fourth quarter on account of a weaker first half.
“After the muted progress of 2-3 per cent y-o-y in 1HFY25, cement demand picked up in 3QFY25 and grew at a excessive single digit. Nevertheless, the weak H1 restricted the demand progress in 9MFY25 to round 3.5 per cent yoy, the bottom previously six years with solely listed entities faring marginally higher,” it stated.
The slowdown within the progress was largely as a consequence of a weak infrastructure demand following a subdued choose up within the union authorities’s capex after the final elections, registering a 12 per cent yoy fall in 8MFY25.
Over the cement costs, the report stated it “declined round 7 per cent yoy in 10MFY25, amid the weak demand and rising aggressive depth, given the massive provide additions.” Though the costs have elevated sequentially from November 2024 with building actions selecting up tempo following the monsoons and festive season, they remained low yoy.
“The southern area is more likely to have witnessed the sharpest contraction given the oversupply, adopted by the japanese area,” stated Ind-Ra.
