Cement: After dull Q3, dreary outlook looms

For cement companies, the December quarter (Q3FY24) was a mixed bag. Price increases had to be partially rolled back on weaker absorption during the latter part of the quarter.

- Harsha Jethmalani

In effect, aggregate realizations growth was tepid. The growth in demand eased.

According to Jefferies India, the cement industry demand grew at around 5-6% year-on-year (y-o-y) in Q3FY24, sharply lower than 12-13% in HIFY24. State elections, unseasonal rain in some regions, and labour shortage weighed on demand during Q3FY24.

Easing input costs brought relief last quarter. Prices of key fuels required to manufacture cement, petroleum coke, and imported coal, fell from recent peaks. Fuel consumption costs for cement players declined 5-15% quarter-on-quarter (except for ACC and Ambuja Cements which reported 1-2% quarter-on-quarter increase) in Q3FY24, said a Motilal Oswal Financial Services report.

In Q4FY24, companies expect fuel cost to stay flat or decline 4-5%, it added.

In a bid to save operating costs and reduce their carbon footprint, cement companies are adopting green energy and alternative fuels in their fuel mix.