Cement Prices: Tug-of-war

Coal-starved China would pay any price for coal, so the country’s managers claim. The unlikely commodity that became very hot in the international market very fast has caused prices to skyrocket. Much has been written here on the subject in this space (“Cement’s coal play”, Oct 5, 2021). In the local context, major coal users like cement millers have been faced with a massive challenge. The outcome? Cement prices in various markets have not stopped rising.

Higher coal prices, higher freight and rupee depreciation have put considerable pressure on cement manufacturers to pass that inflating costs onto the consumer. But not entirely. In fact, based on current coal prices and the margins that cement manufacturers tend to keep (estimated by BR Research), cement manufacturers can raise prices by at least Rs132. So far, the average price increase between the start of September and now stands at Rs28. For markets located in the north zone, these price increases are greater—for instance, Islamabad saw prices go up by Rs35 during this period. To be fair, price hikes have been gradual and in no way as dramatic. Between Feb of last year till today, average cement bags cost Rs160 more.

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