The ban on cement exports imposed last year has significantly pushed down overall exports of the building material, hitting an eight-year-low in FY09. Industry players and analysts said the current financial year might not be any different and exports would around the same levels.
The 212-million-tonne domestic cement industry exported 3.2 million tonnes in 2008-09, merely 1.76 per cent of its production of 181.42 million tonnes. It was only in 2000-01 that the industry exported 3.15 million tonnes , less than that in FY09.
Hari Mohan Bangur, president of the Cement Manufacturers’ Association, said, “The decline in exports was mainly on account of the ban on cement exports, which was later partially, and then fully lifted.”
The government banned cement exports in April last year to rein in inflation. Within two months, however, exports were allowed from Gujarat - the state which makes up 90 per cent of the overall Indian cement exports. The major chunk of exports head for Iraq, Qatar, Nepal, Sudan, Yemen, Mozambique and Sri Lanka. Cement makers like Ambuja Cements, UltraTech and Sanghi Industries are the dominant players in the export market owing to them being coast-based units.
Amrit Lal Kapur, managing director, Ambuja Cements, said, “The ban did not let the industry export to the desired extent. But it is good that most of the cement which was supposed to be exported could be diverted to the domestic market to meet the demand.”
Ambuja Cements, part of the Swiss cement giant Holcim, had the export contract obligation of 1.2 million tonnes for FY09, which it managed to reach. However, in the current year it plans to reduce its exposure to the exports market.
“For the current year we will not export more than 0.8-0.9 million tonnes which will gradually decrease. The exports market is no more lucrative as realisations are continuously declining. In March, realisations slipped to $47 a tonne from $53 a tonne in December,” added Kapur. During the current quarter last year, realisations in the exports market were around $60-65 per tonne.
In the April-June period when exports came into force, the exports dipped 67 per cent to a mere 0.34 million tonnes against 1.05 million tonnes during the same period in the previous year. In was only after August that exports could rise but could not manage to reach the desired level during the year. In spite of the decline in ocean freight rates and rupee depreciation, exports could not gear up.
Industry analysts pointed out that since major importers in the West Asian countries will no longer be deficit region, the exports prospects for the domestic cement industry seem poor.
Source : Business Standard