Rising crude oil and fuel prices amid the Iran-US conflict are expected to increase cost pressures for cement companies. According to Nomura, the industry can absorb the current cost levels through modest price hikes, but sustained increases may become difficult to pass on to consumers as the monsoon season is also approaching which will weaken the demand.
Cement companies may need Rs 5-7 per bag price hike
Nomura said “a 5% increase in overall input costs, including imported fuel, diesel and packaging, could reduce industry EBITDA by more than Rs 80 per tonne, this will require a price increase of approximately Rs 5-7 per bag, including GST, to offset the impact.
Cement trade prices have already increased by around Rs 10 per bag in April 2026 pan India, while companies also announced an initial hike of Rs 5 per bag for May 2026.
Nomura noted that if imported fuel prices continue to rise, the industry may require even higher price increases to maintain profitability “as the sector approaches the seasonally weaker monsoon quarter, sustaining additional price hikes may become increasingly challenging.”
India has already hiked petrol and diesel prices by Rs 7–8 per litre, four times in the last 10 days. The latest hike on May 25 saw petrol prices rise by Rs 2.61 per litre and diesel by Rs 2.71 per litre. Before this, oil marketing companies (OMCs) had already raised prices three times — by around Rs 3 per litre on May 15, nearly 90 paise on May 20, and about 87–91 paise on May 23.
Fuel cost surge may hit cement sector profitability: Nomura
Hike in imported fuel and domestic fuel costs is expected to weigh on the profitability.
“Stronger demand for domestic thermal coal has already resulted in a sharp increase in recent auction prices, suggesting that any further increase in international thermal coal prices could also translate into higher domestic fuel costs,” Nomura noted.
Imported pet coke prices have increased to $146 per tonne, up 15%, while imported thermal coal prices have risen to $115 per tonne, up 16% since the conflict began and 7% month-on-month.
The brokerage added that Indonesia’s proposed move to tighten state control over coal exports could create additional supply-side pressure in global thermal coal markets.
Cement spreads remain resilient
Despite rising costs, cement spreads have remained stable so far. Nomura said cement spreads currently stand at Rs 2,649 per tonne, slightly above the two-year average.
Conclusion
Nomura warns that rising imported fuel along with petrol and diesel prices are likely to put pressure on profitability in the cement sector. While the immediate impact on margins remains manageable as companies may offset higher costs through cement price hikes, the brokerage cautioned that there is a limit to how much prices can be increased. The upcoming monsoon season could weaken demand, making it difficult for companies to sustain higher cement prices.