Rating agency ICRA in its latest report has said that Indian cement companies are likely to witness a 10-15 per cent decline in operating profitability to Rs 820-870 per million tonne (MT) in the current financial year (FY27) as compared to around Rs 950-980 per MT in FY26, due to elevated power and fuel, and selling costs linked to the ongoing West Asia conflict. However, a part of the impact could be offset through an increase in cement prices, as selling costs go up by 6-8 per cent compared to a 10-12 per cent rise in power and fuel costs due to crude-linked cost pressure.
According to the report, the ongoing West Asia conflict has raised global crude oil prices, increasing costs of key inputs such as petcoke, diesel and polypropylene for cement companies, which is likely to weigh on their operating profitability. It said the cement sector remains highly energy-intensive, relying heavily on coal and petcoke for clinkerisation and the operation of captive thermal power plants. It added that cement companies also largely rely on road transport for dispatching cement to customers and moving raw materials to manufacturing facilities.
ICRA said crude oil prices have surged owing to mounting supply disruptions and the effective halt of maritime traffic through the Strait of Hormuz due to the escalating West Asia conflict. The prices are expected to remain elevated if the war prolongs. It expects crude prices to average $95/bbl (a barrel of crude oil) in 2026-27, in the baseline scenario, compared to $72/bbl in 2025-26. Petcoke prices have already risen sharply, with a 19 per cent MoM increase in April 2026, and diesel prices have gone up by Rs 3.9/litre in May 2026.
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