Cement manufacturers in the South flag spike in costs

South Indian Cement Manufacturers’ Association (SICMA) has said that the cement makers in the region have been witnessing a huge increase in production cost due to significant increase in raw material costs.

“The last few months have witnessed an unprecedented increase in the cost of imported coal and the substitute, pet coke, is simply not available. Due to shortage of vessels, even high-priced coal/pet coke is not available. Informed sources say that there will be further increase in the cost of coal/pet coke. Under these circumstances, it is likely that cement production itself will be badly hit,” according to a statement from the Association.

It is estimated that the resultant increase in production cost can be minimum of ₹60 per bag, claimed the statement.

It is difficult to predict either further increase in the fuel cost or the capacity utilisation that can be achieved by the cement industry in south India in the near future, it added.

A report by Anand Rathi Research said, in Hyderabad and Bengaluru, September prices were at August levels with hikes being rolled back, whereas prices softened in Chennai. With dispatches stopped, a ₹15-20/bag price hike is expected from October 6 in Hyderabad. Price hikes of ₹25/bag in trade, and ₹50 in non-trade in Bengaluru and ₹40 in Chennai have been announced. Whether they will persist will be key to watch, it said.