Cement dealers across India suggest that an average cement price has increased by 2% MoM in May 21. This is 4th consecutive month of, MoM price hike by the industry. Over the last 4 months, price hike in East is highest followed up by the South region. Cost has moved up too, in May-21 imported coal price (adjusted for exchange rate) is up 2% MoM.

Commenting on the cement sector, IDBI Capital said, "On demand front, India cement production increased by strong 33% YoY (supported by low base) but we note the absolute cement volume was still lower in Mar-21 versus Mar-19. On cement demand for April/May-21, our interaction with cement dealers suggest, more than 70% of them are close in the current phase of lockdown. But given that cement is essential category, they are able to service orders received online. We understand, in the current environment non trade which is 32-35% of total sales volume at all India level is less impacted."

"In FY21, cement industry volume declined by 12% YoY but all large players have gained market share and they have reported volume growth. For FY22, at an all-India level we are currently modelling in cement volume to increase by 10% YoY. On quarterly basis, cement volume to increase over Q1FY22 to Q4FY22, but growth rate to taper off due to base effect. We have Accumulate rating for ACC, Reduce for ACEM and Hold rating on UTCEM and SRCM, the broking firm added."

Monthly key variables:

Cement prices: Our channel check suggests, average cement price at an all India level is up 2% MoM in May-2021. Price increase is seen in East/South/Central at 3%/4%/2% MoM, North at flat MoM and West at -1% MoM. Cement prices has been increasing in the last 4 months with average price has increased by 8% versus exit price of Feb-21.

Coal cost: In May-21, imported coal price (adjusted for exchange rate) is up 2% MoM. Imported coal (6322kcal) is up 4% MoM and rupee has appreciated by ~1% MoM in May 2021. Imported coal prices ex of freight stood at Rs 6,600/t and has moved northward since Nov 20.

Cement demand: Cement production in India for the month of Mar-21 increased by 33% YoY. Sharp volume increase in Mar-21 is led by higher base of last year. But absolute volume of industry in March 21 is still lower than March -19. FY21 all India cement production stood at -12% YoY.

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