Prices continuing to spike, steeply at times, for the last four months is highlighting the pricing power of the industry, but their sustainability at these levels is being doubted.

After heightened concerns following ACC’s weak results, UltraTech brought the excitement back with a strong 4QFY19 (January-March quarter of 2018-19).

Southern region, which had taken a lead in price hike actions recently, has been ahead of others in reversing their earlier actions too. This has affected the near term pricing sentiment of the overall market.

Over the past decade, the cement industry has witnessed a decline in utilisation rates, despite which, cement prices have held up fairly well. FY19 is likely to end with near double-digit demand growth, which will also take up utilisation.

There is no respite in growth in demand. Taking cue from this development, some medium and small players are testing the market with small hikes.

Though cement demand is expected to grow in double digits during FY19 (2018-19) with pre-election thrust to infrastructure, the unit EBITDA (Earnings before interest, tax, depreciation and amortisation) margins are shrinking, due to prices remaining low, said the leading brokerage CLSA.

The April-June 2018 (Q1) report card of some major cement companies is out, and it has highlighted the major and persistent structural concern affecting the industry - the absence of price hikes.

The cement manufacturers have bitten the bullet much ahead of the beginning of new demand season and raised prices by 3-5 per cent by end of June, mainly to partly cover their rising input costs.

The cement industry is gasping for higher revenues. The industry, which has already been reeling under price pressures with most of the major players focusing on volume growth, is facing the challenge of rising costs, thus making a case for hiking prices.