Indian cement makers are back to their drawing boards to review fuel procurement strategy for new fiscal year starting 1 April after a surge in seaborne petroleum coke and coal prices brought on by the US-Iran war.
India — the world's second largest cement market — is a key importer of high-sulphur coke from origins including the US and Saudi Arabia. Procurement teams usually finalise annual plans for the new fiscal in February, but executives are revisiting their estimates after the war created upheaval in supply chain and triggered rally in coke and coal prices.
At around 30pc, fuel is the single largest input cost for cement producers. A jump in fuel costs typically pressures producers' margins unless they can fully pass on the increase in cement prices. Producers have faced challenges in raising cement prices in recent years due to large capacity additions and a fight for market share.
Prices of coke, a key fuel used in cement making were largely stable in 2024 and 2025. The Argus-assessed delivered India price of 6.5pc coke averaged at around $107.91/t in 2024 and was marginally up at around $111.62/t in 2025. But the average year to date this year is much higher at $124.65/t, while the last assessment was at $145/t on 11 March. April-loading Supramax offers of this high-sulphur coke are being made at $155-160/t to India's west coast.
The unexpected surge is making procurement teams review their budget plans for the April 2026-March 2027 fiscal. Procurement executives at leading cement makers said they had planned their fuel spend for next fiscal at an average price of $120-125/t basis on calorific value (CV) of 7,500 kcal/kg, which is the typical CV in coke. But most buyers now realise that the actual number for next fiscal could be significantly higher.
"We have tweaked our fuel planning since the war started. We increased our term position of US Northern Appalachian (NAPP) NAR 6,900 kcal/kg coal, raised lifting of domestic coal and trying to postpone booking of coke as much as possible," a cement procurement executive said.
The budget exercise undertaken in February is being reworked, said an executive at another cement maker, adding that the share of domestic coal was not significant in the initial plan, but they now aim to use at least 25pc domestic coal in fuel mix, reducing coke burn. "Cement plants located closer to west coast of India are transporting coal from coal hubs in eastern states because there is enough incentive to do so," he said.
Cement makers received 1.36mn t of domestic coal in February, up by about 85pc from a year earlier, coal ministry data show. Receipts rose by 43pc from 950,000t in January. Domestic coal prices are regulated and insulated from fluctuations in the seaborne market, allowing cement plants to replace imports. An extended weakening of the Indian rupee against the US dollar has also raised overall import costs, pushing plants to ramp up local sourcing.
Indian cement makers imported 382,300t of coke in January, down by 55pc from a year earlier and by 51pc from December, according to shipbroker Interocean. Producers still need to blend coke in certain ratios to use local coal effectively.
The removal of a 400 rupees/t ($4.33/t) levy on coal from September 2025 also encouraged producers to raise coal use, but this shift can become more pronounced after the war. Plants can switch between coal and coke depending on cost.
"Fuel is a variable cost for cement, and our cost forecast is based on an estimated fuel price. If the variation is abnormal and on the higher side, it will be passed on in cement prices. We evaluated scope to increase domestic coal further after the war," said the fuel procurement head at a cement maker.
Cement makers would look at ways to manage input costs, but the success will be limited and ultimately they must raise cement prices. Plants are not as panicked as they were after the Russian-Ukraine war that pushed delivered India coke prices to a record $270/t in early 2022 primarily because domestic coal is abundantly available, said a fuel trader.
Supply side challenges in seaborne fuel
High fuel price is not just the only problem for cement producers. Coke supply from middle east countries, the second largest source after the US, has been affected due to the war.
Coke supplies and loading from the 460,000 b/d Aramco/TotalEnergies' Satorp refinery in Saudi Arabia's Jubail have stopped because vessels can only reach the refinery on the Mideast Gulf coast by traveling through the strait of Hormuz. Many vessel owners are afraid to transit though the strait because Iran has been attacking the vessels.
Meanwhile, the Saudi Aramco/Sinopec Yasref refinery in Yanbu, Saudi Arabia continues to load but ship tracking data suggest some operators are concerned about a potential escalation in the Red Sea and are diverting away. Jubail and Yanbu each typically ship about 1.8mn t/yr of coke.
At least one Indian cement producer and a non-cement buyer have term coke supply with Saudi Arabian refiners, while several cement makers buy spot Saudi coke.
Meanwhile, supplies of NAPP coal, a preferred alternative to coke because of its high-CV, are limited. NAPP offers are scarce and indicated at about $150/t cfr on India's west coast, with at least two key producers lacking volumes to load until May, according to a Dubai-based coal trader.
