Cement makers drive export volumes

Even as the export demand for cement has risen significantly in recent months from West Asian countries, only the coast-based cement companies like Gujarat Ambuja Cements (GACL) and L&T Cement (now known as UltraTech CemCo) have been able to drive up export volumes on the strength of a sharp upturn in realisations overseas. For the first time in recent years, current export realisations that work out to Rs95 per bag and $40 per tonne have shot past net realisations in the domestic market, prompting coast-based companies to increase their exports.

 Responding to questions at an analyst meet early this week, Gujarat Ambuja Cements’ Managing Director Narotam Sekhsaria said, ’’we are the closest port to West Asian countries, no other neighbouring countries like Bangladesh, Pakistan, Sri Lanka or Nepal enjoys a vantage position like we do.’’ Sekhsaria pointed out that in a volume-driven bulk commodity like cement, ’freight cost’ is crucial for imports and as such importing countries in the Gulf region will think in terms of savings in the logistics cost from port to port. ’’Cement may be available in plenty in many countries, but what eventually matters most is how best to bring down the logistics cost of importing cement,’’ Sekhsaria said adding: ’’in that sense, we are in a vantage position to take advantage of it.’’ Explaining further, he said, ’’we, not necessarily all the cement companies in the country, but the west-coast based cement companies, will be in a position to derive the advantage of exporting it to west Asian countries.’’ In that context, he pointed out only two companies are in that position, viz GACL and L&T Cement.

Cement exports from India stood at around 3.5Mt  in the last fiscal, while in the current fiscal it is expected to cross more than 4.0m tonnes. According to cement companies, export demand for cement has shot up in recent months primarily from the Gulf region, pushing up export realisations 50 per cent year-on-year to $40 per tonne.

 Cement exports -- especially from the coast-based companies -- as a result, have jumped 10 per cent during the current fiscal, thus, in effect, sucking out some of the excess supplies primarily in the western region.

 Even if cement exports rise by 0.5Mt in absolute terms, this tightens the supply situation in the Western region. This, in turn, triggers a chain reaction, thus improving the price situation in the northern region, as excess cement from states such as Rajasthan find their way into the western markets, an industry analyst said. Cement prices likely to spurt across south India