The price of Gulf war is flashing on cement bags

The pressure comes as the turbulence in West Asia keeps the energy markets volatile. With coal and petcoke accounting for a significant share of production costs, cement makers have limited room to absorb a sustained increase in fuel prices without compromising margins. Pet coke prices increased from $160 per tonne in March to $188 per tonne in October.

UltraTech Cement Ltd, India’s largest cement maker, said average trade prices remained broadly stable during the September quarter, before beginning to recover towards the end of the period. In the second half of September, trade prices rose by ₹7-10 a bag from the preceding month, while non-trade prices saw sharper increases, chief financial officer Atul Daga said during the company’s earnings call on 19 October. Trade prices are rates charged through dealers and retailers to individual customers, while non-trade prices are typically lower rates offered directly to bulk buyers such as infrastructure companies and large real estate developers.

Prices improved further in October, giving the company a better starting point for the December quarter.

“If demand overshoots supply, it leads to price improvements. If there is a structural change in cost for the industry, ultimately, the end customers will have to bear the cost,” Daga said.

UltraTech's quarterly numbers show precisely the need for such pass-through. The company's fuel and power expenses rose 24% year-on-year to ₹5,511 crore, while fuel cost increased to ₹51.50 a bag from ₹45, according to management.

Cement companies have taken price hikes primarily thrice this fiscal year. In April, prices were hiked by ₹10-15/bag, with some rollbacks in May and June. In July and August, prices remained stable, despite the monsoon season. In September, companies made price hikes of ₹5-8/bag, and in October, by ₹10-12/bag, said Manish Valecha, co-head of Research, Anand Rathi Institutional Equities, adding that this was undertaken to offset fuel and energy costs mainly.

Ambuja Cements Ltd, the country's second-largest cement maker, also expects the industry to push through further price increases as input costs rise. “We will see more progressive hikes expected in the coming months because the industry is going to pass on some of this cost to the customers if they are beyond a reasonable level,” chief executive Vinod Bahety said during the company's earnings call on 29 October.

For Shree Cement Ltd, India's third-largest cement maker, the September quarter illustrated how higher volumes do not necessarily translate into better unit economics when costs rise faster than prices.

Domestic sales volumes grew 18% year-on-year to 9.31 million tonnes, while consolidated earnings before interest, taxes, depreciation and amortization (Ebitda) increased about 4% to ₹1,016 crore. Ebitda per tonne, however, declined to ₹966 from ₹1,055 a year earlier, indicating the pressure on profitability despite stronger sales.

During the quarter, the company's power and fuel expenses surged 56% to ₹1,843.25 crore.

The Kolkata-based cement maker’s managing director Neeraj Akhoury said prices in October were better than in September, but cautioned that the outlook remained dependent on market conditions. “Price is purely a function of demand and supply,” he said, adding that the company expected to deliver better prices in the December quarter than in June-September.

Dalmia Bharat Ltd echoed the sentiment, stating that both September and October have seen healthy price increases, helping them “recover a part of the cost inflation”.

Better pricing, alongside volume growth and improved cost absorption, is expected to support profitability in the December quarter, although higher input costs remain a concern, Yatin Malhotra, chief financial officer of Dalmia Bharat, told analysts.

Margin recovery remains key

The industry's immediate challenge is to turn recent price increases into sustained margin recovery. Cement prices typically soften during the monsoon as construction activity slows, but relatively weak rainfall this year helped keep construction activity going in several markets.

“Price hikes of September-October need to hold as the price hike impact comes with a lag from cost increase, and in some regions be extended, to restore margins,” said Valecha.

Mint earlier reported that cement prices across India have climbed to a one-year high after the West Asia war. Ratings agency Crisil expects prices to return to ₹300-305 levels in FY27, bringing them close to a four-year high.

Cement demand is expected to remain resilient backed by sustained infrastructure spending, urban development, and continued investments in roads, railways, housing and data centres, with demand growth expected at 7-8% in FY27, said Valecha of Anand Rathi, adding that, however, price hike sustenance will vary on regional demand-supply environment and competitive intensity among players along with regional issues such as drought in Maharashtra, Karnataka, Andhra and Rajasthan.

Dipali Banka

Dipali Banka is a Mumbai-based journalist who treats corporate reporting less like a beat and more like a puzzle to be solved. This invariably means she has to read through annual reports and speak with leaders and analysts. She tracks policies, deals, and the pulse of industries spanning metals, mining, paints, and cement, alongside aviation. She started out as an intern at The Statesman and then completed her postgraduate diploma in journalism from Asian College of Journalism, Chennai, in 2025. Relentlessly curious at heart, Dipali is driven by the simple urge to understand how things work and who they impact. Armed with an enduring fascination for steel and aeroplanes, she moves through the churn of daily news with focus, turning complexity into clarity without losing the story. She is particularly committed to shaping numbers into objective narratives, having little appetite for vagueness that gets in her way.Outside the newsroom, Dipali is an unapologetically loud presence who values long conversations and longer walks to unwind. She devours books of all kinds and can often be found indulging in the lyrical sway of contemporary ghazals. She ardently believes that her relationship with her bylines is more sacred than it would ever be with anyone across the human race.