The Hindu Business Line : Cement majors cash in on West Asian construction boom

THE surge in oil prices has brought cheer to at least one section of the Indian industry. Cement majors including Gujarat Ambuja, UltraTech Cement and Saurashtra Cement are among those cashing in on the huge export potential in West Asia, which is witnessing an oil price-led construction boom.

During February, for instance, cement exports showed a healthy growth of 6.67 per cent to 0.32 million tonnes from 0.3 million tonnes, according to data generated by the Cement Manufacturers' Association.

Much of the increase in cement exports has been on account of exports to the United Arab Emirates and other West Asian nations, industry players said.

According to them, the prices for both cement and clinker have shot up by 40-50 per cent in the global market, even as domestic prices remain comparatively subdued. This has opened up huge opportunities for cement majors, especially those on the west coast of the country, to cater to the booming demand in the countries of the West Asian region, they said.

"The export prices of cement have increased to nearly $40 (free-on-board) against $25 six months ago, while clinker prices have risen to close to $30, as against $20 earlier.

"The spurt in export prices is largely on account of the West Asian construction boom and provides tremendous export potential for Indian west coast-based manufacturers since the average realisation in the international markets is higher now," an industry player said.

West Asia has traditionally been a high priced market for cement. In the mid-1990s, cement prices in the West Asian countries were ruling close to the $47-mark and it is only after 1998-99 that cement prices crashed to settle around the $20-mark.

Players such as Gujarat Ambuja, which are based in Gujarat, have a big logistical advantage in shipping products to West Asia, according to industry sources. Also, the company has its own captive port, giving it a tremendous cost advantage.

Gujarat Ambuja Cements, with manufacturing facilities in Gujarat, is among the largest exporter of cement and the company sells about 15 per cent of its production to the export market.

UltraTech Cement, the erstwhile cement division of Larsen & Toubro that is now part of the AV Birla group, is the other big exporter of clinker and cement to West Asia.

Saurashtra Cement is also among those planning to export to West Asian nations in a big way.

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