Exports ban likely to cool down cement prices
The Indian government’s ban on exports of cement and clinker last week in a bid to contain soaring prices seems to be taking effect as several dealers indicate the likelihood of a Rs 3-per-bag cut in prices next month.
H M Bangur, president, Cement Manufacturers’ Association (CMA) & managing director, Shree Cement, said, "The ban on exports will definitely have some impact on pricing, but when and how - that’s too early to say."
Though cement prices are still strong, the pace of increase has moderated to 4% YoY as of March 2008, versus a 20% YoY rise as of March 2007, Bangur pointed out. At present, cement prices are hovering around Rs 235-240 per 50 kg bag in the North and around Rs 215 in the East.
"Another factor that would encourage local producers to reduce prices is the increase in import volumes, which now account for more than 10% of the total domestic demand," said a cement analyst with a local brokerage firm, who can’t be quoted due to compliance reasons.
Analyst J Radhakrishnan of IIFL Research said in a note to clients on April 15 that the ban is likely to hit companies like UltraTech and Ambuja more as these are among largest exporters of the commodity.
Ambuja Cement exported 1.32Mt of cement (worth Rs 277.48 crore) in calendar year 2007. Exports amounted to 4% of its revenues. On the other hand, around 10% of Ultratech Cement’s revenues were from exports.
Published under Cement News
