MUMBAI: Cement prices across India have climbed to a one-year high after the West Asia conflict pushed up global energy and freight costs, raising input expenses for manufacturers, with analysts expecting further increases that could bring prices close to four-year peak levels.
Cement companies have raised prices by ₹15–20 per 50 kg bag this month, lifting all-India average prices by about 5% in April compared with March, according to a Motilal Oswal report dated 10 April. Manufacturers are facing higher costs for fuel, packaging bags and other inputs, with early signs that the price cycle may extend further.
Dealers expect additional hikes in the coming weeks if demand remains steady, according to Motilal Oswal analysts.
Data from Crisil Intelligence shows cement prices previously peaked at about ₹305 per 50 kg bag in FY23, driven by a surge in global crude oil prices amid geopolitical tensions following Russia’s invasion of Ukraine. Prices later eased to ₹300 in FY24 and ₹281 in FY25 as input costs softened and competition intensified. A bag of cement cost ₹287 on average in FY26, mainly due to input cost inflation in the final months of the year.
Prices are expected to rise back to ₹300–305 levels in FY27, bringing them close to a four-year high, according to Crisil.
The latest round of price hikes was led by UltraTech Cement Ltd, the country’s largest cement producer, which is set to be among the first to raise prices, according to an executive aware of the development, Mint reported on 30 March.
Cost pressures intensify
Energy expenses, which account for more than a quarter of total costs for cement makers, have risen as the war in West Asia drives up crude oil and related fuel prices. Crisil estimates power and fuel costs could increase 10-12% this year, adding pressure on margins.
The conflict has disrupted petrochemical supply chains, affecting the availability of polypropylene, a key raw material for cement packaging bags. The crunch has been exacerbated as refiners prioritize crude supplies for LPG (liquefied petroleum gas) production, Mint reported earlier.
West Asia accounted for around 60% of India’s crude oil imports before the outbreak of the war on 28 February. India imports up to 65% of its annual LPG requirement of 33 million tonnes, with 90% sourced from the region.
The war has also pushed up prices of key kiln fuels such as petcoke and coal, while raising freight and logistics costs, further burdening cement manufacturers.
Crisil estimates cement makers’ operating margins could decline 1.5–2% this fiscal despite higher prices. “Geopolitical disruptions will intensify cost pressures…pushing total cost up 4–6% this fiscal,” said Sehul Bhatt of Crisil Intelligence.
Margin focus
India’s cement market remains highly concentrated, with the top four companies accounting for 60% of production capacity and the top nine holding 81%, according to Systematix Institutional Equities. The top five players—UltraTech, Ambuja Cements, Shree, Dalmia and Nuvoco—have a combined capacity of about 530 million tonnes per annum (mtpa).
Competition among major players has pressured prices in recent years, benefiting consumers. However, early signs suggest companies are increasingly prioritizing margins over expansion.
Ambuja Cements Ltd, acquired by billionaire Gautam Adani in September 2022, told analysts during a plant visit in March that it will not rush expansions at the expense of margins, Mint reported earlier.
Despite higher prices, demand remains steady. Cement typically accounts for 8–10% of overall construction costs, limiting the impact of price increases on building activity, according to Bhatt. Demand is expected to grow 6.5–7.5% this year, supported by infrastructure projects and housing construction, Crisil said.