India's cement industry is facing its most severe cost squeeze in recent years. The continuing conflict in West Asia has pushed up the prices of petroleum coke, coal and packaging materials, and the industry has been attacked from both sides in the fragile pricing environment of overcapacity-the contradiction between the soaring cost and the difficulty of passing on the price has become increasingly acute. Cement prices in
many places are expected to rise from April 1 due to rising input costs, increased demand and global supply chain disruptions caused by tensions in West Asia. According to the latest report, the price increase is led by UltraTech Cement, and other companies may follow suit.
Several companies and distributors said that the sharp increase in production costs was the main reason for the price increase. Conflict in West Asia has disrupted supply chains, making key materials such as fuel and packaging more expensive, driving up the price of fuels necessary for cement production, such as petroleum coke and coal, and pushing up the cost of cement bags due to a shortage of polypropylene. Ashutosh Muraka, an equity research analyst at
Choice, estimates that geopolitical shocks will increase production costs by 150 to 200 rupees per ton, directly compressing corporate earnings before interest, tax, depreciation and amortization. Electricity fuel accounts for about 30% of cement manufacturing costs, and major producers rely on imported petroleum coke for 50% to 60% of their fuel. Tensions in the Middle East have led to a surge in crude oil-linked energy prices, and this exposure has become a significant risk.
Cost pressures extend beyond fuel, with prices of polypropylene bags, a standard packaging material for cement, soaring as they are directly linked to crude oil prices, and LPG supply shortages further exacerbating packaging costs. Mulaka expects packaging costs alone to weigh on per-tonne EBITDA by Rs 50-60, with a combined hit of Rs 150-200.
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