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Cement prices likely to increase amid rising costs of fuel, raw material: Report

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Dealers of cement shall pass the surge in input costs like fuel, power, pet coke, logistics, and freight to customers, reports say.

Cement prices likely to increase amid rising costs of fuel, raw material: Report
Amid escalating raw material costs and a spike in fuel and power prices, cement companies are likely to raise prices in the third quarter of the fiscal. Dealers may pass on the surge in input costs like fuel, power, pet coke, logistics, and freight to customers, a report said.
As per industry estimates, average cement prices rose by 7-8 percent year-on-year to Rs 384-386 per 50 kg in October 2021, according to an Economic Times report. The development comes when the demand for cement has soared in several regions due to a rise in construction activities.
In the international market, prices of pet coke, a key input in cement manufacturing, increased to $235-$250 per tonne in October from $95-$100 per tonne a year ago. Similarly, coal prices (Australia) shot up to $160 per tonne from $55-$60 in the year-ago period.
Cement companies factor in 15-35 percent of total expenditure as fuels costs, which influence operating margins.
According to analysts, with improvement in demand from the real estate sector and with the government's push for infrastructure, the companies will pass on any increase in input prices to consumers in the near term.
In the October-December quarter, dealers may increase prices by 10-15 percent to offset rising input costs and protect margins, Times Now reported. Cement firms were looking at hiking prices in the July-September quarter too but refrained from it due to low demand, the report said.
In the second quarter, cement prices generally decline 2-3 percent quarter-on-quarter due to poor demand in the monsoon season.
“The cost of production has gone up significantly and every player has increased the prices,” N Srinivasan, vice-chairman and managing director, India Cements, told BusinessLine. His company saw its net profit declined to Rs 22 crore in the September quarter from Rs 71 crore in the year-ago period.
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