“Manufacturers begin to pass on increasing costs due to the Russia-Ukraine conflict”
“Manufacturers begin to pass on increasing costs due to the Russia-Ukraine conflict”
Domestic cement prices could rise by £25-£50 a sack this month as manufacturers have started to pass on rising costs stemming from the Russia-Ukraine conflict, Crisil said in a report.
“Having risen to ₹390 per sack over the past 12 months, domestic cement prices will increase by another ₹25 to ₹50 in the regions in April in April as manufacturers start to pass on rising costs due to the Russia-Ukraine conflict” , Crisil said of the report.
Crude oil prices rose to an average of $115 a barrel in March, it said.
Also, international coal prices have risen due to various factors including the Russia-Ukraine conflict, weather disruptions in Australia’s main mining areas and Indonesia’s ban on coal exports to meet domestic demand, he added.
“The resulting increase in electricity and fuel costs has in turn increased the cost of road freight transport, which accounts for 50% of cement transport. Bulk diesel prices have risen by ₹25 per liter, while retail diesel prices have risen 14 times since mid-March, for a total increase of £10 per liter,” it said.
According to Crisil Research Director Hetal Gandhi, cement demand rose 20% year-on-year in the first half of FY22, but experienced an unexpected slowdown in the second half due to unusual rainfall, sand issues and a shortage of workers.
“In FY2023, cement volume growth will be stable at 5-7%, driven by demand for affordable housing from Tier 2 and Tier 3 cities as well as infrastructure. However, high construction costs will limit the increase in demand,” he said.
Volumes have increased in all regions, although actual demand trends can still be monitored as an escalation in construction costs is expected to weigh particularly on cement demand in the cost-sensitive rural housing segment.
For the record, residential construction accounts for nearly 60% of cement demand.
