Recent government’s decision to increase the load carrying capacity of trucks by 25% has come as a big relief for building materials industry in general and cement manufacturers in particular. Cement manufacturers were complaining about the strict enforcement of truck overloading which had considerably increased the freight costs of the cement suppliers, especially in Northern states like UP, Haryana, MP and Chhattisgarh. Even some of the plywood manufacturers were complaining about the overloading issue affecting their margins. The government has come out with a further clarification that the new rule will be extended to old trucks too which will help to bring down the freight cost.
Freight cost has also gone up for cement manufacturers due to recent spike in diesel prices which has impacted some cement companies as much as 5%. Further, recent rise in the cost of pet coke has come as double whammy for cement manufacturers. Pet coke prices have gone up by 45% from 2017 lows affecting the profitability of many cement manufacturers. Further, falling rupee value vis-a-vis dollar has also affected the pet-coke import parity costs.
Cement manufacturers prefer pet coke as it is 20% cheaper than other fuel sources, including imported coal.
Ultratech Cements, ACC and Ambuja Cements are the leading cement manufacturers in the country.