Cement firms in India increase cement costs as input prices inflate

08 Oct 2021 CW Team

Cement firms across India have raised cement prices by Rs 10-40/bag in October as input costs have inflated.

According to cement dealers, the rise in prices is higher in Mumbai and Gujarat area, where the increase is Rs 40/bag, while in North and South India, the surge in costs is about Rs 10-20/bag. A cement bag weighs 50 kg, and the average cost of a cement bag is about Rs 375 across India.

Analysts said that while the input price inflation is one of the reasons for the cement firms to raise costs in October, an increase in demand coming from the realty sector and the government's push on infrastructure is another reason.

Cement firms had been planning to increase the costs of their products in the July-September quarter as well but could not do much due to the seasonality of low demand. During July-September, cement costs usually correct 2-3% quarter-on-quarter due to lower demand because of monsoons in the period.

But, this time around, dealers say that the firms might further raise costs by 10-15% during October-December to pass on the increase in input costs and preserve their margins.

As per a report by Emkay Global Financial Services dated September 6, In July-September, average pan-India costs likely dipped 3% quarter-on-quarter, which is additionally likely to have kept cement firms' margins under pressure for the quarter.

But, the brokerage believes that margins are likely to bounce back with demand and cost recovery in the second half of the current financial year.

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Also read: Cement production slumps 12% in Q1 FY22: ICRA report

Also read: Cement prices in August fell by 3% to Rs 328 per 50 kg

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