Cement to get dearer as Iran war pinches manufacturers

Mumbai: The cement industry is bracing for a sharp price increase in April as the fallout from the war in West Asia drives up production costs. UltraTech Cement Ltd, India’s largest producer, is set to be the first to increase its price, according to an executive in the know.A price hike by the market leader is likely to trigger similar moves by other cement makers, who are under even greater pressure from higher costs, given their relatively smaller scale.“Nobody will increase cement prices now as they need to meet the year-end targets, but price increase will be seen in the month of April, and cost will be passed on to the consumers,” said the executive quoted above, requesting anonymity, discussing business strategy.Emails sent to UltraTech did not elicit a response till press time.The rise in cement prices is expected to marginally increase construction and infrastructure costs, as cement typically accounts for around 5% of total construction cost, according to Satyadeep Jain, lead analyst for cement, metals, mining and utilities at Ambit Capital.“Cement companies will need ₹20/bag price hike to fully offset cost Inflation vs typical ₹7-8/bag hike in April.

It’s possible cement companies don’t pass on the entire cost increase in one go, and we see margins being fully restored over time,” Jain said.A cement bag weighs 50 kgs.The West Asia war has disrupted supply chains, particularly affecting the availability of polypropylene, a key raw material used to manufacture cement packaging bags, commonly referred to as bori. Refiners have worsened the crunch by prioritizing crude derivatives for LPG production, tightening supply for packaging applications, Mint reported earlier.For now, UltraTech has a low inventory of