Cement Prices Set to Rise by Rs 10-15 per Bag from Mid-October
Emkay Research predicts a cement price hike of Rs 10-15 per bag from mid-October due to rising fuel and input costs.
In a significant move for the construction sector, cement manufacturers in India are expected to implement a price hike of Rs 10 to 15 per bag starting in mid-October. According to a recent report by Emkay Research, this upward adjustment is a strategic response to persistent input cost pressures that have been weighing on the industry's profitability.
Rising Input Costs Driving Price Hikes
The decision to increase prices comes as companies struggle to offset the escalating costs of essential raw materials. Despite previous rate adjustments in the first quarter, manufacturers found that these measures were insufficient to cover the surge in power and fuel expenses. The situation was further complicated by a monsoon-driven softening in prices during July and August, which widened the deficit for producers.
The research highlights several key economic pain points for the sector:
- Fuel Costs: Rising fuel expenses have been a major challenge for the last six to seven months.
- Coal and Petcoke: Spot quotations for petcoke and imported coal are significantly higher than second-quarter averages, trading at approximately USD 175 and USD 150 per tonne, respectively.
- Packing Expenses: The cost of polypropylene granules has rebounded to over Rs 135 per kilogram, adding to the operational burden.
Demand Remains Robust Despite Inflation
While rising costs pose a challenge to margins, the demand for cement remains a bright spot for the industry. Emkay Research notes that the onset of a busy construction season and favorable demand-supply dynamics are creating a strong environment for consumption. The report projects a steady 7-8% year-on-year growth in industry volume offtake for the first half of FY27, largely propelled by the non-trade segment.
Looking ahead, the demand momentum is expected to stay strong for the next 18 months. This growth is anticipated to be fueled by:
- The busy construction season in the second half of FY27.
- Major infrastructure activities and pre-election developments leading into the general elections in 2029.
Impact on Profitability and Future Outlook
The report warns that the full impact of these elevated input costs—estimated at an additional Rs 300-400 per tonne—is likely to be reflected in second-quarter earnings. Manufacturers are facing a sequential decline in earnings of approximately Rs 200 to 250 per tonne due to high fuel bills and negative operating leverage.
To stabilize operations, the industry requires sustained price hikes of about Rs 10 per bag. Consequently, the upcoming price adjustments in October are viewed as crucial for the sector to manage cost inflation and maintain operational stability as it moves toward a projected 7% compound annual growth rate through 2028.