Business & Services Manufacturing

Number Game: There’s a Lot More to the Cost of Cement Than We Can Think of

Think of cement and the real estate sector is the first thing that will come to mind. Cement and concrete form the heart and soul of the skyscrapers that we come across. But there’s a lot more to the cement industry than what meets the eye. The sector contributes heavily to the economy and its demand is increasing at a rate of knots being a foundation building material in homes, buildings, and commercial hubs.

Some stats you need to look at: 

  • The country produces 509 million tonnes of cement in a year. At present, India produces the second-largest volume of cement in the world.
  • A little under 10% of the global cement producing capacity is concentrated in India
  • The production of cement in India stood at 28 million tonnes (July 2019).
  • 98% of the production capacity is owned by the private sector, while the rest of it is owned by the govt sector.

What determines the cost of cement?

A lot of factors come together to determine the cost of cement; these are:

It depends on the supply:  Well, this one is a basic concept. Cement, just like any other commodity, works in tandem with the concept of demand and supply. If and when a country invests heavily in infrastructure, the prices of cement are bound to surge. Higher production will lead to a reduction in prices.

In case the supply chain is interrupted, i.e. if the production falls down due to any unforeseen reason, then this will lead to a gap between demand and supply, which will cause the prices to go up (over the roof).

Even more so on the cost of production:   It goes pretty much without saying that the energy required to produce and manufacture cement keeps will be immense. So, if the cost of power goes up, so will the cost of production (operational costs). Everything, right from the labour costs and to the cost of equipment required for production, comes under the operational cost.

There are times when increased transportation costs cause the prices of cement to rise. Not just the production, but the services required for sending packs of cement to wholesalers, which includes loading and unloading, also come with a price tag. Therefore, it is imperative that all of the overhead costs are taken into account to decipher the cost of the cement.

There are a few companies producing cement at economical prices. MP Birla unique cement falls under this category as a 50-kilogram bag of it won’t cost much. Companies undertaking budget-friendly production practices have caused quite a stir in recent times.

Demand is equally important:

There are times when demand increases. If a country is investing heavily in uplifting the country’s infrastructure, then cement prices will shoot up. Simply put: more the demand, more will be the price (this holds true for just about any commodity). In case the country’s economy is witnessing a sharp slump, then cement producers will have limited takers as the number of commercial projects and investments will decline as nobody will have the financial resources to kick-start these projects.

So, looking at all of the aforementioned factors, it can be said that the cost of cement is also dependent on the laws of demand and supply, but numerous economical options are also available in the market. MP Birla unique cement brings you affordable solutions to meet all of your building construction requirements.

Leave a Reply

Your email address will not be published. Required fields are marked *