High cement prices may continue to give the government a headache, even if the government implements a ban on cement exports. This is since such a ban can hardly impact cement prices.
Cost of production will keep increasing and cement companies are witnessing a fall in margins, and hence, will be unable toreduce prices.
Analysts feel that a ban will only impact growth marginally, resulting in decrease in dispatches due to a ban on exports. However, it isstill a wait and watch situation on whether the ban will be implemented, and if yes, whether it will be for the short/medium or long-term.
According to analysts, the FY08 (till February 2008) figures show that cement exports were about 6 million tonne including export of clinkers of about 2.5 million tonne.
Industry players say that the prices of international coal has more than doubled in the past six months, resulting in increased cost of production. Hence, they need to pass on the hike to consumers but are not able to do so, owing to pressure from the government.
Says AK Saraogi, CFO of JK Cement, ?Cement prices depend on demand-supply scenario and same will be the case going forward.?
?The prices are expected to remain stable or increase marginally (by Rs 3 to Rs 5) in the month of April, May and June and from July, the prices are expected to decrease,? said a Mumbai based cement dealer on condition of anonymity. He further said, ?The export ban is likely to supplement domestic availability and hopefully soften cement prices.?
