Renewed demand from the Middle East has pushed up export prices of cement by $10-$15 to around $40-$44 /t.
Companies such as Gujarat Ambuja Cement, Sanghi Cement and UltraTech CemCo, who have manufacturing facilities near ports in Gujarat will be the main beneficiaries of the increase in demand and export prices.
Exports realisations at the current freight on board prices are around 16 per cent higher, compared with domestic ex-factory prices in Gujarat, which are in the region of Rs 80 per 50 kg bag. Exports incentives like duty waivers on coal or furnace oil also lead to a lower cost of production, resulting in better margins.
A stronger export market also provides an outlet for the excess supply in Gujarat, reducing pressure on domestic prices. In the first four months of the current fiscal, exports have been in the region of 3.2 million tonne, including clinker exports of 1.87 million tonne. The current year could see exports up to 9 million tonne, close to a 100 per cent increase compared to last year.
Gujarat Ambuja is the largest exporter of cement in the country, while UltraTech CemCo and Sanghi mainly export clinker.
Gujarat Ambuja exported 1.72Mt of cement in the year to June 30, 2004, 15 per cent of the country’s total exports of 3Mt. While half the company’s exports were to the Middle East and Gulf region, a substantial amount of cement was exported to Sri Lanka. The company is expecting to export around 2Mt of cement in the current year.