The demand-supply imbalance caused by large-scale dumping by local cement producers has distorted the price equilibrium and brought down prices. The problem has been compounded due to undercutting by leading players.

Gujarat is the largest cement exporter accounting for 80 per cent of the country's total exports.

"Cement exports have been instrumental in maintaining the price equilibrium in the region. Now that export consignments are finding their way into the local market, retail prices have touched new lows," the marketing chief of a cement major said. The region is also a leading supplier of cement to the southern and western markets.

"We will have to clear our stocks before the monsoons begin in full swing. And this is having a telling effecton prices," the executive said.

Although industry sources say prices in Gujarat have fallen to below Rs 100 a bag, producers maintain that prices are marginally higher at Rs 105-110 a bag.

Producers say that the weak prices have not lead to any panic as the region is witnessing a robust demand growth of around 19 per cent.

"Prices have crashed to below Rs 110 a bag owing to large-scale dumping of export consignments. There is, however, no need for panic as prices should go up over the next three months," an industry source said.It is learnt that the invoice price for consignments is around Rs 115-120 a bag, and companies offer special discounts between Rs 5 and Rs 10 over and above this. Industry sources said that the Gujarat ports are yet to become fully operational after the recent cyclone. "Large ships, which usually carry cement consignments, are not allowed at any of these ports, and this is posing a major problem for the exporting companies," sources said. The region exports around 20 lakh tonnesof cement a year. However, Gujarat Ambuja, the largest exporter, has not been much affected as its exports are routed through its own jetty. "Gujarat Ambuja has built its own infrastructure to export cement, and hence there was never a need to sell export consignments in the local market," company sources said.

Demand in the Gujarat region is estimated at around 6 lakh tonnes a month, even though production capacity is far higher. Cement supply to Mumbai from the state has been affected because of the monsoons. This has adversely affected supplies as consignments for other states, too, have found their way into the local market.

Industry-watchers say that although the poor situation of ports played a role in lower exports, cement firms are yet to come to terms with the Asian currency crisis, which rendered produce from the orient far more price-competitive compared with local exports.

"We believe things will start improving from September, by which time the south-east Asian currencies may firm upbetween 5-10 per cent. This will help cement exports even assuming that rupee may touch Rs 43 to a dollar by then," an executive said.Low realisation in the overseas markets has also dented exports, as prices dropped to a low of $25 a tonne. However, export prices have increased to $28 a tonne, and are further expected to look up in the coming months," sources said.