Construction firms look East for cement imports as prices firm up

Construction firms look East for cement imports as prices firm up
Published: 30 October 2006

Construction companies in India are looking east for importing cement as domestic price of the building material is moving north. As cement prices have shown over 60 per cent increase in last one year, construction majors are planning to import it from Indonesia and Korea. "An year ago we paid Rs135 for a 50kg bag of cement.

Today, the cost of one bag has reached Rs220. Still, there is uncertainty about cement price in the domestic market. It is unlikely to stabilise in the next few months," said B Seenaiah, president, National Highway Builders Federation.

The cost of imported cement works out to Rs135-140 per bag inclusive of cost, insurance and freight. Cement companies has already met the government and expressed their concern. "We had met the minister of road transport and highways. Now it is up to the ministry to take up the issue with the commerce ministry," Mr Seenaiah said.

Members of the federation include Larsen & Toubro, Gammon, Soma Enterprise and Nagarjuna Construction. Cement prices have shown an upward trend due to the phenomenal surge in demand. Number of housing, malls, bridges and flyovers are being constructed in the country.

The demand has been also augmented due to the trend of converting roads from flexible pavements (using bitumen) to rigid pavements (using cement and concrete). In concrete roads, 50 per cent of the constructing material is cement.

According to the industry, Indonesia and Korea are logical options. "In countries like Indonesia and Korea, capacity exceeds demand, which is why they are able to export cement at relatively cheaper prices. Import of cement will definitely be cost effective for those projects which are nearby the east coast," said Umesh Gupta, assistant vice-president, Gammon India.

Cement companies are, however, not worried about the import threat. "Imported cement is unlikely to be of any threat to domestic cement companies. Inclusive of transportation costs, imported cement may cost the same, if not more," said Ashish Guha, country head, Heidelberg Cement.