Cement exports dip 30% on high domestic demand

Buoyant domestic demand and prices of cement, coupled with the rupee's appreciation, have led to a 30 per cent decline in the country's cement exports.

Cement exports in the April-July period of the current financial year have declined by almost 30 per cent, from 2.85 million tonnes to 2 million tonnes, according to the data available with the Cement Manufacturers' Association.

Total cement exports in 2006-07 stood at 8.96 million tonnes. Industry experts estimated this year's total export to be 20-25 per cent lower than last year.

"Companies are concentrating more on the domestic market which is witnessing an increase in consumption and shortage in supply. Moreover, with an increase in the domestic price the difference between export and domestic realisations has become negligible. Companies are realising 5-10 per cent more in domestic sales vis-a-vis exports," said J Radhakrishnan, research analyst with India Infoline. The strengthening of the rupee against the dollar has also affected the export margins of cement companies.

On the contrary, domestic consumption has been rising in the same period. Domestic production and despatch in the April-July period of the current year stood at 55.25 and 54.94 million tonnes respectively, up 7.44 and 8 per cent over last year's corresponding figure of 51.42 and 50.84 million tonnes.

Domestic demand for cement has been buoyant, driven by the enormous infrastructure and housing growth in pockets such as Noida, Gurgaon, Chennai and Hyderabad.

The demand-supply imbalance has also led to measures like removal of import duties by the government so that cement can be imported.

The sustained demand even during the rainy season is something that helped most cement producers to go ahead with a price hike of Rs 3-5 per 50 kg bag in July. Ambuja Cements and Ultratech are the two leading cement exporters and West Asian countries are the main export markets for Indian cement.

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LOCAL PUSH

Cement exports in the April-July period of FY08 have declined by almost 30 per cent, from 2.85 million tonnes to 2 million tonnes, according to data with the Cement Manufacturers' Association

Industry experts estimated this year's total export to be 20-25 per cent lower than last year's

Domestic demand for cement has been buoyant, driven by the infrastructure and housing growth in pockets such as Noida, Gurgaon, Chennai and Hyderabad