New Delhi

The cement industry is likely to witness a round of sharp price hikes in the first quarter of calendar year 2026, supported by seasonally strong demand and a delayed impact of large capacity additions, according to a report by HSBC Global Investment Research.

"We expect industry to push through large cement price hikes in 1QCY26, with some of the hikes absorbed given the seasonally strong period for demand," the report said.

It added that while capacity additions remain significant, their impact will not be immediate. "Overall, we still see over 100MT of new capacity addition in the industry over FY26-27 and this is larger than incremental demand, but the actual impact of this capacity addition is likely to be back-ended in CY26, and this should allow for higher cement prices in 1HCY26."

The report noted that the second half of calendar year 2025 had been weak for the sector, marked by limited pricing power and muted realizations. The period was described as a "disappointment given lack of price increases," largely due to weather-related disruptions and slower government spending on infrastructure projects.

Looking ahead, demand growth is expected to moderate compared to the post-pandemic surge. "Demand growth should normalize in the 6-7% range vs the 9% seen in FY24," the report said, while cautioning that "FY26-27 capacity additions (c100MT) are larger than incremental demand".

In the near term, operational performance may remain under pressure. HSBC expects the December quarter to be relatively weak due to sequential price declines, particularly in the eastern and southern regions.

Cost pressures could also weigh on margins, with a potential rise in pet coke prices adding to input cost inflation. However, the report believe these headwinds will be temporary, with operating leverage improving as pricing recovers and volumes grow in subsequent quarters.

The report highlighted that cement producers have already begun taking pricing action in key markets. "Cement companies have either pushed for large price hikes in South/East at end Dec/early Jan or are likely to do so during January," HSBC said.

ALSO READ: What do Quran, Hadith, and Caliphs mandate about Illegal religious structures?

While not all announced hikes are expected to sustain, some pass-through is likely. "While we do not expect all the announced price hikes to flow through, we expect some to go through, especially in the East and South, and drive EBITDA/t higher from 4QFY26 onwards," the report added.

Overall, HSBC remains constructive on the sector's medium-term outlook, citing improving demand visibility, disciplined pricing behaviour during peak periods and the deferral of capacity-led pressure to the latter part of CY26.