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Indian export markets drop

World Cement,


India’s cement exports are facing serious challenges, as flagging demand leads to a US$ 5 – 10 price drop for major players Ambuja Cements and UltraTech.

Export market failing

Speaking to India’s Business Standard, Ajay Kapur, head of marketing and commercial services at Ambuja Cements, said that demand in the key export markets of West Asia and Sri Lanka has dropped considerably, with a construction slowdown during Ramadan adding further to the problems. The last 3 – 4 months have seen cement prices fall considerably, and clinker prices are suffering similarly. K C Birla, CFO at UltraTech, also spoke to the news service, confirming that the company is likewise suffering from a price drop in the export markets.

Increased competition

The future of India’s cement export industry has become more uncertain in recent times. During the brief export ban last year, Pakistan ‘picked up the slack’, and took over where India left off. At the same time, capacities in the West Asian markets of Saudi Arabia, Iran and UAE, among others, have grown considerably, to the point that some of these may soon count themselves as exporters.

October figures

The country’s major players have announced their shipment and production figures for October 2009, with varying results.

Shree Cement has recorded a 12.3% y/y upswing in October shipments, which finished at 701 630 t. The company has been performing well this year, with April – October shipments up 26.52% to 5.2 million t from 4.11 million t in the same period last year.

Aditya Birla, owner of Grasim Industries and UltraTech Cement, reported an 11.1% rise in October cement shipments, at 2.819 million t. Production was up 12.5% to 2.934 million t.

ACC Ltd did not record such good results, with October shipments down 0.6% y/y to 1.69 million t. Production similarly fell marginally to 1.71 million t from 1.74 million t in October 2008.

Ambuja Cement, Holcim’s other Indian venture, performed better. At 1.464 million t, shipments were up 3% y/y. Production was likewise up at 1.498 million t from 1.451 million t last year.

Future challenges

Kapur is predicting a drop of 20 – 30% in exports this year, but is confident that excess capacities can be diverted to the domestic market. Vinod Juneja of Binani Cement is similarly optimistic that the decline in exports will not be permanent, given that many of the projects that the product was going to are yet to be completed.

Meanwhile, CMA President and Managing Director of JK Lakshmi Cement, Vinita Singhania, has given an interview to The Economic Times, in which she states that taxation is the industry’s biggest challenge. In terms of over capacity or declining export markets, Singhania is confident that the cyclical nature of the industry will rectify any demand/supply imbalance. The CMA is working to increase the per capita cement consumption in India, which is among the lowest in the world, by promoting the use of concrete, such as in the construction of roads, where bitumen is frequently used. 

Read the article online at: https://www.worldcement.com/asia-pacific-rim/06112009/indian_export_markets_drop-/


 

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