Cement prices have dropped to a five-year low due to heightened competition within the sector, as highlighted in a report by Yes Securities.
The report pointed out that despite attempts to increase prices in recent quarters, subdued demand forced these hikes to be rolled back, reflecting the weak market environment.
“The backdrop of intense competition has led to weak pricing, and cement prices have currently dropped to a five-year low….. In the near term, we don’t expect any significant price hike; we rather foresee stable pricing till the advent of normalization,” the report stated.
The intense competition among manufacturers has created pricing pressures, making it difficult for the industry to sustain price increases. This trend is likely to continue in the near term, with no significant price hikes anticipated until demand strengthens.
However, the report also shed light on several long-term trends expected to shape the sector in the coming years. Demand recovery is anticipated to begin around mid-FY26, driven by increased infrastructure development, a revival in rural and urban housing demand, and a surge in real estate activity. These factors are expected to gradually stabilize the demand-supply imbalance.
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The report predicts sluggish demand in FY25, with the industry potentially seeing flat or negative year-on-year volume growth. Despite this, capacity utilization is expected to improve gradually, narrowing the gap between demand and supply.
The sector is projected to add around 90 million tonnes of cement capacity organically between FY25 and FY30. Installed capacity is expected to reach 703 million tonnes by FY27 and 723 million tonnes by FY28.
“We can expect a demand revival from the mid of FY26E backed by factors like pick up in infrastructure projects, revival in rural & urban housing demand, and a real-estate project spree backed by a gradual normalization of the ‘Demand & Supply’ dynamic,” the report added.
Beyond this period, the pace of capacity expansion is likely to slow, helping the market avoid oversupply challenges.
The report also highlighted the role of cost deflation initiatives and industry consolidation in fostering better price discipline over time.
For now, the sector is expected to maintain stable pricing as it works towards normalizing demand-supply dynamics. While the current challenges persist, the long-term outlook is optimistic, with improvements in market conditions and pricing trends projected to begin from FY26.
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