Cement sector records strong volumes in Q4 but pricing still under pressure
Anil Singhvi of Shree Digvijay Cement who has been tracking the cement industry for a long time and has headed several companies, gave a few insights on the Q4FY23 performance by the sector. He mentioned that the focus is currently on volumes, and pricing has taken a backseat.
The cement sector has reported its earnings for the fourth quarter of the financial year gone by (FY23) and there has been a significant increase in the total volume produced. However, the price has not seen any significant change. The cost is expected to remain low despite the strong volumes.
Even in the current month, where prices usually increase, there hasn't been any significant change, and any minor changes have been rolled back. The numbers show that the volumes are exceptionally high, with UltraTech Cement, Dalmia Bharat, and even ACC showing growth of 10 to 15 percent despite the Himachal unit shutdown. There are no concerns on the volume front.
The good news is that costs have been decreasing, but pricing has been under pressure with a decrease of 1 percent to 3 percent sequentially. This pressure has been particularly felt in the south, with companies like ACC experiencing a pricing compression of almost 3 percent.
Anil Singhvi of Shree Digvijay Cement who has been tracking this industry for a long time and has headed several companies, gave a few insights. He mentioned that the focus is currently on volumes, and pricing has taken a backseat.
Additionally, he predicted that any price increase is unlikely to occur until October, after the monsoon season. He also advised not to expect any inorganic growth, which was a topic of discussion previously.
Dalmia provided an update on the cost of fuel, which was significantly high but is gradually decreasing. For the upcoming quarter, it is expected to be lower by approximately $10 per tonne, which is a considerable amount.
Over the last year, the average fuel cost increased by about $50 per tonne. However, it is anticipated that this will correct itself and decrease by $40 to 50 per tonne.
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