Cement prices are up marginally, but worries on crude-linked input costs emerge

Key Highlights

• The Mumbai-Ahmedabad bullet train late-stage work is in full swing, driving cement volumes in the region.
• Pan-India focused UltraTech Cement and Ambuja Cements having exposure to this region should benefit. Also Read | UltraTech tightens grip on volumes, costs as pricing revival awaitedHowever, potential labour shortages due to Holi and continued volume push may limit steep price hikes across most markets in March. Nonetheless, moderate price hikes along with improving leverage are positives; JM Financial Institutional Securities anticipates Ebitda/tonne expansion of >Rs200 sequentially in Q4FY26. Fuel spikeOn the flipside, costs of key input materials international coal and imported petroleum coke have risen, following the surge in crude oil prices.“The US CFR (Code of Federal Regulations) petroleum coke prices rose around $13/tonne month-on-month in February, with spot levels reaching around $135/tonne, marking a 52-week high.
• This implies a cost escalation of about Rs140-150/tonne (about Rs7-8/bag),” said JM’s report dated 1 March. Power & fuel costs account for an estimated 30-35% of the sector’s production cost. Typically, cement companies import petroleum coke and stock fuel inventories for two-three months, which means the profitability impact comes with a lag.
• This time, the impact is likely to be reflected from H1FY27. The margin dent will vary depending on fuel usage.
• For instance, petroleum coke comprised 45% of UltraTech’s Q3FY26 fuel mix; followed by JK Cement at 60% and Shree Cement at 76%. Margin risksCosts may rise further amid ongoing tensions in the Middle East.