Cement export ban may have minimal effect on the industry

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Mumbai, Apr 11: The government’s move to impose a ban on cement exports, taking into consideration the rising mismatch between demand and supply of the commodity, may have a minimal impact on the industry, feel analysts.

According to experts, it is still a wait-and-watch situation. The question is whether only cement will be banned from exports or clinkers too?

“If only cement is banned, then clinkers will be exported. Figures reveal that from April 2007 to February 2008, cement exports was 3.3 million tonne, which is just 2.2% of the total dispatches. For the same period, clinker exports were about 2.1 million tonne,” said a Mumbai-based analyst.

Says HM Bangur, VP, Cement Manufacturers Association (CMA) and chairman and MD of Shree Cement, “The ban should not have much impact if it is also revoked in time.”

However, the impact will be on UltraTech and Ambuja Cement whose contribute about 50% of the total exports.

Says Hitesh Agrawal, head of research, Angel Broking, “Financially, both the companies are not likely to be impacted to a great extent as the quantum of exports is not much. Hence, the ban on exports will turn out to be positive as companies will sell their commodity in the domestic market, which has a huge growing demand.”

He further said, “Still, with the ban on cement exports, there will not be a significant downgrade in cement prices.”