Cement exports have hit record lows because cement manufacturers are worried of drastic measures including a possible ban on exports after they refused to give in to the government pressures to reduce domestic prices.
Finance Minister P Chidambaram is clearly not quite happy with the one-year price freeze agreed to by manufacturers and what followed was the withdrawal of countervailing duty on imported cement to step up the heat.
As a result, the companies realized that it’s time to scale down exports as a ban could complicate matters with the overseas buyers.
Gujarat Ambuja the country’s largest cement exporter cut down exports to 1.13 lakh tonne last month, as against 1.7 lakh tonne a year back.
Aditya Birla group controlled Ultratech, the other big exporter saw its export volumes dip from 1.65 lakh tonne to 1.4 lakh tonne.
Export prices are ruling strong at around $48 per tonne but Indian players don’t want to get into a situation where a government ban comes in the way of meeting the export obligations.
As they will not only be forced to pay damages, they could also get blacklisted by the international buyers.
For cement makers the move to scale down exports won’t hit realisations, as domestic prices are ruling strong.
However, this could have some adverse impact when domestic demand slows down during the monsoon months.