The benefit that cement manufacturers got from low input prices in the June quarter, which translated to better margins, is likely to reverse. Some brokerages have started raising red flags about the likely development. Cement companies should brace for some erosion at the earnings before interest, taxes, depreciation and amortisation level in the September quarter due to hardening fuel costs.
Data provided by S&P Global Platts shows that globally, the prices of thermal coal, the FOB Richards Bay 6,000 kcal/kg, surged from $50.283/MT in the beginning of the year to $62.445/MT in July. Richards Bay 6,000 kcal/kg NAR (net as received) is a grade bought by Indian buyers, especially cement companies.
Similarly, average petroleum coke, or petcoke, prices rose from $45/MT in January this year to $81/MT in August. Supramax cargo of imported petcoke with typical 6.5 per cent sulphur is delivered to India’s east coast port of Krishnapatnam. S&P Global Platts has been tracking the price of petcoke delivered to India on a weekly basis from March 2015 and this is highest price since then.
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