Cement Sector Check - Prices Rise QoQ Despite Softness In November: Motilal Oswal

Motilal Oswal Report

Our channel checks suggest that all-India average cement price declined ~2% month-on-month (Rs 7 per 50 kg bag) in November 2023, due to price declines across regions, except in the West.

However, we note that average price in Q3 to-date is higher by ~5%, led by hikes in September-October 2023. Cement demand was also subdued during the month due to festive holidays, labor unavailability, implementation of pollution control curbs and elections in some states.

Regionally, a sharper price decline was seen in the East (down 4% month-on-month), followed by the Central (down 3%), the South (down 2%), and the North (down 1%).

In the West, prices largely remained stable month-on-month in November-23. In the East, dealers have indicated prices may further drop in the near term due to a slow pick-up in demand and higher competitive intensity.

Cement demand was subdued in Nov-23 and volume is estimated to have declined 4-5% YoY in Nov-23, partly due to a higher base of last year.

We estimate industry volume to grow 6-7% YoY in Q3 FY24, likely supported by a pick-up in demand in Dec-23.

Imported petcoke price has been range-bound at $125-130/tonne for the past few months.

Imported coal (South African) price declined ~19% month-on-month to $108/tonne.

At spot prices, consumption cost stands at Rs 1.55/Kcal (imported Petcoke) and Rs 1.60/Kcal (imported coal).

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