Material Insights · Understanding the Material World

Building materials and Energy-intensive industry

Cement and glass are energy-intensive industries in their own right: kiln and furnace heat is most of their energy use and energy is about 30% of cement manufacturing cost, so fuel prices move their margins directly.

Building materials (industry) and Energy-intensive industry (energy): 4 relationships.

How they are linked

1. Industry input

Physical flow · Strong · Energy-intensive processes → building materials

Making glass and clinker needs continuous high-temperature heat, so building materials makers depend on energy-intensive processes; the site rates this 4 of 5 for float glass makers and 3 of 5 for cement producers.

  • 4 of 5 criticality for float glass makers (continuous melting)
  • 3 of 5 criticality for integrated cement producers and grinding units (kiln heat)

Grinding units that buy clinker are less exposed than integrated plants that burn fuel in their own kilns. Glass makers are the most exposed because a melting furnace runs without stopping.

Enterprise types that depend on it:

  • Float glass makers: continuous high-temperature melting (criticality 4 of 5)
  • Integrated cement producers and grinding units: kiln heat is the main energy use (criticality 3 of 5)

Sources: Material Insights

2. Kiln and furnace heat

Physical flow · Strong · Fuel and power → clinker and glass

Limestone must be heated to make clinker and sand melted to make glass, so heat, not electricity, is most of the energy these plants use.

  • about 770 kcal/kg average thermal energy per kg of clinker in Indian plants, best about 680 (2021)
  • about 97 kWh average electricity per tonne of OPC cement in India, best about 77 (2021)
  • 5 to 7 GJ energy used per tonne of glass produced

In a typical dry-process cement plant, fuel provides 75 to 80% of energy and electricity 20 to 25%. A glass melting furnace has a working life of 10 to 20 years and runs continuously through it, so glass makers must keep buying energy whatever its price.

Sources: Indian Cement Review; MDPI

3. Fuel costs drive margins

Cost and price · Strong · Fuel prices → building materials costs and prices

Energy is one of the largest costs in cement, so a rise in coal, petcoke or diesel prices cuts margins until producers can raise prices.

  • about 30% share of energy in cement manufacturing cost (2021)
  • 50 to 55% share of power and fuel plus selling costs in Indian cement operating costs, 2026
  • ₹820 to 870 a tonne ICRA forecast of operating profit per tonne for Indian cement, 2026-27, down from an estimated ₹950 to 980 in 2025-26

Petcoke prices rose 19% month on month in April 2026 as the West Asia conflict lifted crude, and producers raised cement prices by ₹10 to 12 a bag. Pass-through is partial and lagged, which is why ICRA still expects operating profit per tonne to fall 10 to 15% in 2026-27.

Sources: Indian Cement Review; The Tribune (ICRA data)

4. Energy efficiency rules

Policy · High in India · Efficiency policy covers cement as an energy-intensive sector

India's Perform, Achieve and Trade (PAT) scheme sets energy savings targets for energy-intensive industries, and cement is one of its sectors, so plants that beat targets can sell savings certificates.

  • 478 industrial units in eight sectors, cement among them, in PAT's first cycle
  • 1,073 designated consumers in 13 sectors across six PAT cycles, to March 2020

Average Indian plants are already within about 90 kcal per kg of clinker of the best, so further savings depend more on waste heat recovery and fuel substitution than on kiln tuning.

Sources: Indian Cement Review; Bureau of Energy Efficiency

For investors

Key learnings

  1. Energy is about 30% of cement manufacturing cost, so fuel prices are a first-order driver of cement margins.
  2. Pass-through is partial and lagged: in 2026 ICRA expected Indian cement operating profit per tonne to fall 10 to 15% in 2026-27 despite price rises.
  3. Glass makers are the most exposed, because a furnace runs continuously over a 10 to 20 year life and must buy energy at any price.

What to track

  • Petcoke and imported coal prices: Rising prices squeeze cement margins before price hikes catch up (Weekly · Argus, industry press)
  • Cement EBITDA per tonne: Shows how much of fuel cost producers are passing on (Quarterly · company results, ICRA)
  • Diesel price: Raises freight and selling costs (Monthly · PPAC)

For policymakers

Key learnings

  1. Indian cement plants run at around 770 kcal per kg of clinker on average, close to the best at about 680, so most remaining savings need new technology, not tuning.
  2. PAT already covers cement, giving a ready tool to push waste heat recovery and alternative fuels.
  3. Cement fuel costs follow petcoke and crude prices, so West Asia shocks reach construction costs quickly, as the April 2026 price rises showed.

What to track

  • PAT targets and certificates traded for cement: Measures efficiency progress (Per cycle · Bureau of Energy Efficiency)
  • Petcoke and coal imports: Shows the sector's exposure to imported fuel (Monthly · DGCI&S)

India

Indian cement plants use about 770 kcal per kg of clinker on average, against about 680 for the best (2021), and burn petcoke and coal whose prices follow crude, so the 2026 West Asia shock led ICRA to forecast a 10 to 15% fall in operating profit per tonne for 2026-27.

Sources

  1. Building materials: materials, Material Insights (2026)
  2. Energy efficiency: still some way to go, Indian Cement Review (2021)
  3. Energy use in glass manufacturing (Processes, vol. 10, article 2653), MDPI (2022)
  4. Rising petcoke, diesel prices to hit cement makers; ICRA cuts FY27 profitability outlook, The Tribune (ICRA data) (2026)
  5. Brief note on PAT scheme, Bureau of Energy Efficiency