Ambuja Cements Ltd (ACL) and Aditya Birla Group’s UltraTech Cement, the two biggest exporters of cement in India, have expressed concerns over prices coming down in the export market.
“There is pressure on exports and prices are likely to take a dip by about $10 per tonne,” said KC Birla, CFO of UltraTech Cement Ltd. Export price of cement currently stands at $65 per tonne.
UltraTech had decided to export the surplus cement after fulfilling domestic demand and had planned to export about 2 million tonne in the current fiscal.
AL Kapur, MD, ACL, told FE, “Earlier, Dubai was an attractive destination for exports, which is not the case now. Prices are expected to be flat, going ahead. However, I am very positive that we will export at least 1 million tonne,” he added.
ACL, last year, exported about 1.32Mt of cement amounting to Rs 277 crore. It plans to export about 0.80 to 0.90 million tonne in the current year (December 2008).
“We have already exported 0.75Mt till November and in the next year also we are targeting to export around 1Mt,” Kapur added.
Cement exports in the current year from April to October 2008 was 1.44Mt against 2.15Mt in the same period last year, a dip of about 33%. This was owing to ban on exports of cement and clinker by the government in April this year. Last year, cement (FY2008) exports were 3.3Mt and clinker exports were about 2.1Mt.
The export majors had planned to increase cement exports taking the advantage of growing demand and booming construction sector in the Middle East, which, however, seems to be no longer attractive because of capacities coming up in the domestic market in the Middle East. Players are also witnessing Chinese cement entering the Middle East market at a competitive price.
According to experts, cement export will act as a hedge when prices start correcting due to oversupply situation here. But the oversupply situation is resulting in a price correction in the export market as well.