Energy and resources (6 of 6)

Building materials

About 8 minutes to read in full, or 1 minute for the short version belowFacts checked 1 October 2026

In one minute

Companies quarry stone, burn limestone into cement, roll steel bars and make sheet glass, and sell these heavy materials to the builders of homes, roads and offices.

The big idea: Most building materials are heavy and cheap for their weight, so they are sold close to where they are made: the map is the market. Profit comes from a plant's position on the local cost curve, how full it runs, and what it pays for fuel and freight. Carbon is becoming a new cost, because making clinker releases carbon dioxide from the limestone itself.

One unit, in numbers: One tonne of grey cement sold by a large cement maker in India: INR 5,400 comes in, and INR 950 (18%) is left after its own costs.What is left is the unit's contribution, before the costs of the whole company. See the worked example
Typical margin: About 13 percent operating margin for US building materials companies; about 20 to 22 percent EBITDA margin for the large cement and aggregates groups; about 4 percent operating margin for US steel makersRoughly how much of every 100 of sales (or income) is left as profit after the running costs. More on margin
Capital intensity: HighA lot of money must be tied up before the business earns anything, so the return on that money matters as much as the margin. More on capital intensity
The number to watch: EBITDA per tonneProfit before interest, tax, depreciation and amortization for each tonne sold: the standard way to compare cement makers.

Ask this first in a case

Which product and which region: who are the nearby plants, and how far away are they?

Words used above (2)

Aggregates:: Crushed stone, sand and gravel used in concrete and under roads.
Clinker:: Hard grey lumps made by heating limestone and clay in a kiln; ground into cement.

The industry's other words are explained in Words to know (13).

On this page (17 sections)

How money is made

Producers sell by the tonne at prices set mostly by the balance of local capacity and demand, not by costs.
Because kilns, quarries and furnaces have high fixed costs, profit rises sharply as utilization rises.
Plants win the customers for whom their delivered cost (gate cost plus freight) is lowest, so location is a lasting advantage.
Aggregates companies earn on scarce permitted reserves near cities, where rivals cannot easily open new quarries.
In retail markets, brands and dealer networks let cement makers earn a little more per bag.

Worked example: one unit

Unit economics means the money in and out for one unit of the business. Start from the revenue, take away the unit's own costs, and what is left is its contribution. More on unit economics

The unit: One tonne of grey cement sold by a large cement maker in India, at INR 5,400 a tonne. Illustrative, rounded figures.
Line	Amount	ShareShare of revenue
Net price received per tonne, after discounts and taxes	INR 5,400	100%
Minus Power and fuel (coal, petcoke, electricity)	INR 1,200	22%
Minus Freight and handling to customers	INR 1,050	19%
Minus Raw materials (limestone, gypsum, fly ash, slag)	INR 900	17%
Minus Employees	INR 300	5.6%
Minus Other costs: packing bags, maintenance, selling and administration	INR 1,000	19%
What is left (contribution)	INR 950	18%

Check: INR 5,400 minus INR 4,450 of costs leaves INR 950.

So what: The plant keeps about INR 950 of EBITDA a tonne, about 18 percent of the price, and power, fuel and freight take over 40 percent of the price. A 10 percent rise in fuel costs takes INR 120 a tonne, so the levers are fuel cost, lead distance, utilization and price discipline in the region.

Key measures(8)

Key measures (also called KPIs, key performance indicators) are the numbers people in this industry track. Ask for the first one or two early in a case.

EBITDA per tonne
Profit before interest, tax, depreciation and amortization for each tonne sold: the standard way to compare cement makers.
Typical: About INR 890 a tonne at Ambuja Cements in the year to March 2026[4]
Capacity utilization
Tonnes produced divided by capacity. Fixed costs are spread over fewer tonnes when it falls. Glossary: Capacity utilization
Typical: India produced about 453 million tonnes in the year to March 2025 against nearly 690 million tonnes of capacity, about two thirds[5]
Price per tonne (realisation)
What the producer actually receives per tonne after discounts.
Power and fuel cost per tonne
Fuel and electricity for one tonne: the largest cash cost for most cement plants.
Freight cost per tonne and lead distance
What it costs to deliver each tonne, and how far it travels on average.
Clinker factor
The share of clinker in a tonne of cement. Lower means less fuel and less carbon dioxide per tonne.
Typical: About 0.76 on global average[6]
Carbon dioxide per tonne of cement
Emissions from fuel and from the limestone itself; a direct cost where carbon is priced.
Typical: About 0.63 tonnes of carbon dioxide per tonne of cement on global average[6]
Aggregates cash gross profit per ton
Price per ton of stone minus the cash cost of producing and selling it.
Typical: About USD 11.33 per ton at Vulcan Materials in 2025, on a price of about USD 22[7]

First questions to ask

When a case lands in this industry, these questions get you to the numbers that matter.

Which product and which region: who are the nearby plants, and how far away are they?
How full are our plants and our rivals' plants, and is new capacity coming?
What is our delivered cost per tonne to the key cities, against our rivals?
What fuel do we burn, and how has its price moved?
Do we sell in bags through dealers or in bulk to contractors, and does carbon have a price here?

Value chain: where the margin sits

The value chain is the steps a product or service passes through, from the first supplier to the customer. Each step below shows how much of the value it keeps. More on value chains

Step 1: Quarrying: limestone and clay for cement; crushed stone, sand and gravel (aggregates) for concrete and roads
Fat margin
Vulcan Materials, Martin Marietta, CRH, Holcim, Heidelberg Materials, and cement makers' own quarries
Permitted reserves near growing cities are scarce and hard to replicate; Vulcan earned cash gross profit of about USD 11.33 per ton of aggregates in 2025.
Step 2: Cement making: a kiln turns limestone into clinker, which is ground with gypsum and other materials into cement
Medium margin
UltraTech, Ambuja, Holcim, Heidelberg Materials, Anhui Conch, Yamama Cement, SCG
Large building materials groups earned EBITDA margins of about 20 to 22 percent in 2025 (Heidelberg Materials 21.8, CRH 20.5), and Holcim a recurring EBIT margin, after depreciation, of 18.3 percent; plants in oversupplied regions earn far less.
Step 3: Ready-mix concrete and precast: cement, aggregates and water mixed and delivered, or cast into blocks and beams
Thin margin
Cement majors' concrete arms and many local firms
Concrete sets within hours, so plants are small, many and close to building sites.
Step 4: Steel for construction: rebar and beams rolled from steel made from scrap or iron ore
Thin margin
Nucor, Commercial Metals, Tata Steel, JSW Steel, Hadeed, Hoa Phat
US steel companies averaged about 4 percent operating margin in January 2026 data.
Step 5: Flat glass: sheet glass made on float lines, then coated, toughened or laminated
Medium margin
Saint-Gobain, AGC, NSG (Pilkington), Guardian Glass
A float furnace runs non-stop for years, so keeping it full matters.
Step 6: Distribution and sale: dealers and shops for bagged cement, direct bulk sales to contractors and ready-mix plants
Thin margin
Cement dealers and building materials merchants; the producers' own sales teams
In India and much of Asia and Africa, many homes are built by families who buy bagged cement from dealers.

Profit pool: who keeps the money

Where in the value chain the profit ends up, which is often not where most of the sales are. More on profit pools

The profit sits with owners of scarce, permitted quarries near growing cities and with low-cost cement plants that dominate their local market, because heavy materials cannot be brought in cheaply from far away. Steel for construction and ready-mix concrete earn thin margins, and plants in regions with too much capacity, such as parts of China, Indonesia and Vietnam, earn little.

Cost structure(5)

The main costs, each as a share of revenue (the money from sales).

Cost of goods sold, US building materials companies: About 69 percent of revenue[1]
Power and fuel, Indian cement makers: About 26 to 28 percent of costs[2]
Freight and logistics, Indian cement makers: About 20 to 25 percent of operating cost[3]
Selling, general and administrative costs, US building materials companies: About 17 percent of revenue[1]
Operating profit, US building materials companies: About 13 percent of revenue[1]

Benchmarks(7)

Typical figures for the industry, to check a client's numbers against.

Operating margin, US building materials companies: About 12.6 percent[1]January 2026 data, 41 companies.
EBITDA margin, US building materials companies: About 17.3 percent[1]
Recurring EBIT margin, Holcim, 2025: About 18.3 percent[8]
EBITDA margin, Heidelberg Materials, 2025: About 21.8 percent[9]
Adjusted EBITDA margin, CRH, 2025: About 20.5 percent[10]
Operating margin, Saint-Gobain (glass and building products), 2025: About 11.4 percent[11]
Operating margin, US steel companies: About 4.1 percent[1]

Typical cases(6)

Case prompts you might hear in this industry.

Should a cement maker build a new plant in East Java, Indonesia?
An Indian cement maker sold more tonnes this year but earned less. Why?
Should an aggregates company buy a quarry near a fast-growing US city?
How should a European cement maker respond to rising carbon costs?
Should a Saudi cement producer export its surplus clinker?
Two cement makers in the same region want to merge. What are the synergies, and will the regulator allow it?

Common traps(6)

Mistakes candidates make in this industry, and what to do instead.

Treating cement as one national or world market when it is many local ones.
Forgetting freight, which can decide who wins a city even against a plant with a lower gate cost.
Planning a new plant on national demand growth while ignoring idle capacity nearby.
Cutting price to win volume without expecting rivals with high fixed costs to follow.
Ignoring carbon cost and the clinker factor in Europe, where they now hit the margin directly.
Reaching for a generic framework instead of the real driver of this industry. Instead, start from delivered cost per tonne, plant utilization and energy cost, and draw the map of plants and customers.

What changed, 2024 to 2026(8)

Recent changes a case could turn on.

China's property slump cut its cement output to about 1.69 billion tonnes in 2025, down about 7 percent and the lowest since 2010, as real estate investment fell about 17 percent.[12]
India kept growing and consolidating: UltraTech passed 200 million tonnes of domestic capacity in the year to March 2026 and took control of India Cements in December 2024, while Adani's Ambuja reached 109 million tonnes.[13]
Too much capacity in Southeast Asia: Indonesia has about 122 million tonnes a year of cement capacity against demand of about 64 million tonnes in 2025.[14]
Carbon became a cost: the EU carbon charge on imports (CBAM) entered its definitive phase on 1 January 2026 and covers cement and steel. Free EU carbon allowances for these sectors began to shrink in 2026 and end in 2034 under current law; a July 2026 European Commission proposal would stretch that to 2038 if Parliament and member states agree.[15]
The first industrial-scale carbon capture plant at a cement works opened in Brevik, Norway, in June 2025, built to capture about 400,000 tonnes of carbon dioxide a year, half the plant's emissions.[19]
Holcim spun off its North American business as Amrize on 23 June 2025, creating a separate US-listed building materials company.[20]
The United States doubled its Section 232 tariff on steel imports from 25 to 50 percent from 4 June 2025.[21]
The 2026 disruption of shipping through the Strait of Hormuz hit petcoke supplies for kilns, and Crisil expects Indian cement makers' power and fuel costs to rise 10 to 12 percent in the year to March 2027.[2]

Players by region(8)

Well-known companies in each region. You do not need to learn them by heart; they help you picture the market.

Global: Holcim (Switzerland)
Heidelberg Materials (Germany)
CRH (Ireland, listed in New York)
CEMEX (Mexico)
Saint-Gobain (France, glass and building products)
Anhui Conch and CNBM (China)
Europe: Holcim
Heidelberg Materials
CRH
Buzzi (Italy)
Titan (Greece)
Saint-Gobain
ArcelorMittal (steel)
United States: Amrize (spun off from Holcim in 2025)
Vulcan Materials (aggregates)
Martin Marietta (aggregates)
CRH
Nucor and Commercial Metals (steel)
Guardian Glass
Middle East: Yamama Cement
Saudi Cement
Qassim Cement
Southern Province Cement
Hadeed (steel, owned by the Public Investment Fund since 2024)
Emirates Steel Arkan (UAE)
India: UltraTech Cement (Aditya Birla, with India Cements)
Ambuja Cements and ACC (Adani)
Shree Cement
Dalmia Bharat
Tata Steel
JSW Steel
Southeast Asia: SCG (Thailand)
Semen Indonesia
Indocement (part of Heidelberg Materials)
Vicem (Vietnam)
Hoa Phat (Vietnam, steel)
China: CNBM
Anhui Conch
China Resources Building Materials
Africa: Dangote Cement (Nigeria)

Words to know(13)

Linked words have a fuller entry in the glossary.

Aggregates: Crushed stone, sand and gravel used in concrete and under roads.
Clinker: Hard grey lumps made by heating limestone and clay in a kiln; ground into cement.
Kiln: The long rotating oven where clinker is made at about 1,450 degrees Celsius.
Clinker factor: The share of clinker in a tonne of cement.
Blended cement: Cement that replaces some clinker with fly ash, slag or calcined clay.
Ready-mix concrete: Concrete mixed at a plant and delivered by drum truck to the site.
Rebar: Steel reinforcing bar set inside concrete to make it strong.
Float glass: Flat glass made by floating molten glass on a bath of molten tin.
Delivered cost: The cost at the plant gate plus freight to the customer.
Lead distance: The average distance each tonne travels to the customer.
Realisation: The price per tonne a cement maker actually receives, used widely in India.
Netback (glossary entry): An export price minus freight and port costs: what the plant really earns.
CBAM: The EU Carbon Border Adjustment Mechanism, a carbon charge on some imports.

Business model patterns

The ways of making money this industry follows. Spot the pattern in a new industry and you already know the first questions to ask.

Sources(22)

Facts checked on 1 October 2026. Worked examples are illustrative, shaped by these sources rather than one company's figures.

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