The Hindu Business Line : Cement export ban to have muted impact on prices

The ban on cement exports announced late last week is the latest in a series of policy moves to prevent cement prices from trending further upwards. Though a ban on exports will not have a big impact on the country’s overall demand-supply balance, cement companies in the western region may be the ones to feel the pinch from this move.

West deficit

Cement exports have been traditionally dominated by players from the western region, with Ambuja Cement and UltraTech Cement together accounting for about 58 per cent of the total cement shipped overseas in FY-08. The recent prohibition on cement export could now prompt these players to look mainly to the domestic markets for liquidating their output.

This may add significantly to supply in markets such as Gujarat and Maharashtra, served by these players.

Reports suggest that there has been a persistent supply deficit of around 1.5-2 million tonnes in the western region since 2002-03. This deficit may now be more or less bridged with the ban on exports.

Higher supplies could help in moderating prices from the current levels in the western region.

The ban on exports may however, not significantly change the country’s overall domestic demand supply equation, as cement exports accounted only for about 3.6 per cent of the total domestic output in FY-08.

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