Cement prices, which declined in FY25, are expected to move up in FY26 with higher raw material cost and better demand.
Chennai: Cement prices, which declined in FY25, are expected to move up in FY26 with higher raw material cost and better demand.
The average pan-India cement prices in 11M FY2025 declined by 8 per cent against the same period in the previous year to Rs 335 per bag due to slowdown in demand in H1 FY2025.
In 9M FY2025, sales volumes increased by a modest 3 per cent to 319.0 million MT, majorly due to slowdown in construction activity owing to the general elections and extended monsoon season during H1 FY25. With the expected ramp-up in government capex and with Q4 being a seasonally stronger quarter, ICRA estimates 8-9 per cent volume growth in Q4 FY2025, translating into full-year growth of 4-5 per cent to 445-450 million MT in FY2025.
In FY2026, the volumes are likely to grow by 6-7 per cent to 475-480 million MT backed by sustained demand from the housing and infrastructure sectors.
Moreover, cement prices in FY25 had declined due to the correction in raw material prices. In FY2025, the prices of coal declined by 23 per cent, pet-coke by 13 per cent and diesel by 2 per cent. Raw material prices may go up due to disruption in global trade and consequent inflation.
Cement prices in FY26 are likely to be marginally higher by 1- 2 per cent compared to FY2025.
Meanwhile, capacity additions may increase by 43-45 million MTPA in FY2026 against 32-35 million MTPA estimated in FY2025. This will be driven by healthy demand prospects.
During FY2026, eastern and northern India are likely to lead the grinding capacity expansion with additional 22-24 million MTPA. In FY2026, despite an increase in demand, the utilisation is likely to remain moderate at 70 per cent on an expanded base.
The volume growth and realisation trend of prominent industry players will be relatively better than that of the broader industry trend. Mid-size and small sized entities are expected to underperform in the near to medium term.
