Strategies for managing cement price fluctuations

Set a budget: Determine your budget for the cement procurement. A predefined budget will help you make informed decisions based on your financial capabilities.
Buy in bulk or lock-in prices: Consider purchasing cement in larger quantities. Many suppliers offer volume discounts, which can help you lock in a lower price per unit, especially during price spikes.

Example: If you order 10,000 bags upfront, you can secure a 5% discount and lock in the rate for the entire project.
Optimise cement content: Concrete producers can optimise cement content with lower-cost performance - Supplementary Cementitious Materials (SCMs) like fly ash, slag cement, and silica fume to control costs when the price of cement rises.

Example: Substituting 20% of cement with fly ash in your concrete mix reduces costs without sacrificing performance.
Diversify suppliers: Relying on a single cement supplier can leave you vulnerable to their pricing strategies. Diversify your supplier base to access competitive pricing and reduce dependence on a single source. Online platforms, like JSW One MSME, have different suppliers for various types of cement.
Inventory management: Maintain an inventory of cement when prices are favourable. This stockpile can serve as a buffer during price spikes, allowing you to continue work without disruptions.

Example: During low cement prices, you purchase an extra 1,000 bags of cement and store them securely. You tap into this inventory when prices rise unexpectedly, preventing cost spikes and project delays.
Cost-plus contracts: Consider using cost-plus agreements for clients willing to accept a variable material cost component. This approach can help pass on price increases to clients when necessary.

Example: In a cost-plus construction contract with a client, you agree to pass on any material cost increases. If cement prices rise by 10%, the client agrees to cover the additional costs, ensuring your project remains financially viable.
Constant monitoring: Stay vigilant and monitor market trends regularly. Knowing potential price fluctuations allows you to adjust your budget and procurement strategies accordingly. Start with an exact cost estimation that includes current cement prices. Use historical data and industry benchmarks to project potential price changes.
Contingency budget: Include a contingency budget line item for material price fluctuations. This reserve can absorb unexpected increases in cement costs.

Example: In your construction project budget, allocate a 10% contingency fund for material price fluctuations, including cement.

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