Cement prices have started rising, thanks to higher fuel prices

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Cement companies are likely to increase prices in the third quarter of the current financial year as input costs have gone up, the Economic Times reported, quoting analysts. Rising fuel prices are a cause of concern for cement manufacturers as higher prices can impact their profitability, it added.

The all-India average cement prices have gone up by 7-8% to Rs 384-386 per 50 kg in October, according to the report, which is also said that data from dealer checks of brokerages indicate that prices are rising. Higher construction activities have aided the price rise, it added.

International pet coke prices jumped to $ 235-$ 250 per tonne in October from $ 95-$ 100 per tonne a year ago, according to the newspaper report.

Australian coal prices surged from $55-$60 per tonne to $160 per tonne.

Cement businesses’ operating margins are influenced by fuel costs, which account for 15-35% of overall expenses. Given the improved trend in demand, analysts expect that companies will pass on increases in input prices to consumers in the near future.

Meanwhile, another report by HDFC Securities showed that cement prices are projected to climb during H2FY22 as cost inflation continues to grow.

As the Covid effect began to fade, cement demand increased starting in June 2021.

Cement demand is recovering well, according to the report, and has supported minor price corrections over the monsoon season.

If cement prices increase, then it will affect the real estate sector in a big way. The growing costs of critical raw materials such as cement and steel, will certainly affect the cost of production and this will further affect the consumers and real estate developers.