<p>Bengaluru: The US-Israel Iran conflict has disrupted fuel supply to tile manufacturing units in Gujarat’s Morbi forcing shutdowns at 90-95 units out of 725 tile plants amid shortage of propane and potential cessation of Gujarat Gas supply after March 15. Fuel switching offers limited short-term flexibility as controlled shutdown/restart takes two-three days and kiln modifications for alternatives such as RLNG could take at least a month.</p><p>With gas accounting for 20-25% of production costs, organised players plan phased price hikes of Rs 25-85 per sq metre (7-15%) for GVT/PVT tiles. Organised players are better positioned due to higher inventory (45-60 days versus 18-20 days) for unorganised units, and the disruption could even lead to permanent closure of 5-6% of plants, JM Financial said in a research note.</p>.West Asia conflict | Saudi Aramco refinery, Kurdish, Israeli oil & gas fields shut amid airstrikes.<p>Export outlook remains weak as 35-40% of Morbi shipments go to West Asia, to which trade flows are currently disrupted. </p><p><br>The Morbi cluster has 700-725 active plants producing ceramic, glazed vitrified tiles (GVT) and polished vitrified tiles (PVT). However, 90-95 plants have already shut operations due to fuel shortages. The industry primarily relies on propane (about 70% of fuel mix) and natural gas (20-22%). LNG use is limited to 1-2%. Propane supply has been disrupted after the government directed oil marketing companies and private suppliers to prioritise LPG over propane. In addition, Gujarat Gas has indicated that supply may cease after March 15. </p><p><br>Tile plants must have a controlled shutdown, typically maintaining a buffer of two-three days to gradually reduce kiln temperatures. Restarting a plant also takes two-three days and costs Rs 20 lakh in case of large plants and Rs 10-12 lakhs for smaller units. While alternatives such as coal or RLNG are technically feasible, modifying kiln setups would take at least a month, limiting near-term substitution options. Gujarat Gas is currently in discussions with authorities to continue supplying gas to existing customers, potentially at a 40-45% higher price, the research note said.</p><p>Gas accounts for 20-25% of total production cost in tile manufacturing. In response to the sharp increase in fuel costs and supply constraints, organised players have decided to implement price hikes in three phases in March 2026. The magnitude of hikes is expected to be Rs 25-85 per sq metre (implying 7-15% price hikes) for GVT/PVT tiles while ceramic wall tile prices are unlikely to see increases at this stage. </p><p><br>Organised players are relatively better positioned due to higher inventory buffers (45-60 days) compared with 18-20 days for unorganised players in Morbi. As a result, supply disruptions could lead to temporary capacity shutdowns among smaller manufacturers, benefiting organised players with stronger balance sheets and distribution networks. The disruption could potentially lead to permanent closure of 5-6% of plants in the Morbi cluster.</p><p>Exports account for a significant portion of Morbi production, with 35-40% of shipments directed to West Asia. Exports to this region are currently disrupted, although routes to markets such as the US, Russia, and Latin America remain operational. </p>
<p>Bengaluru: The US-Israel Iran conflict has disrupted fuel supply to tile manufacturing units in Gujarat’s Morbi forcing shutdowns at 90-95 units out of 725 tile plants amid shortage of propane and potential cessation of Gujarat Gas supply after March 15. Fuel switching offers limited short-term flexibility as controlled shutdown/restart takes two-three days and kiln modifications for alternatives such as RLNG could take at least a month.</p><p>With gas accounting for 20-25% of production costs, organised players plan phased price hikes of Rs 25-85 per sq metre (7-15%) for GVT/PVT tiles. Organised players are better positioned due to higher inventory (45-60 days versus 18-20 days) for unorganised units, and the disruption could even lead to permanent closure of 5-6% of plants, JM Financial said in a research note.</p>.West Asia conflict | Saudi Aramco refinery, Kurdish, Israeli oil & gas fields shut amid airstrikes.<p>Export outlook remains weak as 35-40% of Morbi shipments go to West Asia, to which trade flows are currently disrupted. </p><p><br>The Morbi cluster has 700-725 active plants producing ceramic, glazed vitrified tiles (GVT) and polished vitrified tiles (PVT). However, 90-95 plants have already shut operations due to fuel shortages. The industry primarily relies on propane (about 70% of fuel mix) and natural gas (20-22%). LNG use is limited to 1-2%. Propane supply has been disrupted after the government directed oil marketing companies and private suppliers to prioritise LPG over propane. In addition, Gujarat Gas has indicated that supply may cease after March 15. </p><p><br>Tile plants must have a controlled shutdown, typically maintaining a buffer of two-three days to gradually reduce kiln temperatures. Restarting a plant also takes two-three days and costs Rs 20 lakh in case of large plants and Rs 10-12 lakhs for smaller units. While alternatives such as coal or RLNG are technically feasible, modifying kiln setups would take at least a month, limiting near-term substitution options. Gujarat Gas is currently in discussions with authorities to continue supplying gas to existing customers, potentially at a 40-45% higher price, the research note said.</p><p>Gas accounts for 20-25% of total production cost in tile manufacturing. In response to the sharp increase in fuel costs and supply constraints, organised players have decided to implement price hikes in three phases in March 2026. The magnitude of hikes is expected to be Rs 25-85 per sq metre (implying 7-15% price hikes) for GVT/PVT tiles while ceramic wall tile prices are unlikely to see increases at this stage. </p><p><br>Organised players are relatively better positioned due to higher inventory buffers (45-60 days) compared with 18-20 days for unorganised players in Morbi. As a result, supply disruptions could lead to temporary capacity shutdowns among smaller manufacturers, benefiting organised players with stronger balance sheets and distribution networks. The disruption could potentially lead to permanent closure of 5-6% of plants in the Morbi cluster.</p><p>Exports account for a significant portion of Morbi production, with 35-40% of shipments directed to West Asia. Exports to this region are currently disrupted, although routes to markets such as the US, Russia, and Latin America remain operational. </p>