FY11 had been a particularly hard-hitting year for the local cement industry, especially the former half of it, thanks to the great floods of 2010. The current fiscal year, however, saw some improvement in local cement dispatches, although the export side showed cement off-take tanking marginally. Overall, total cement dispatches for 4MFY12 witnessed a 6 percent increase over the same period of last year. In the face of a year-on-year decline in export dispatches in 4MFY12, the surge in total off-take is attributable to higher local dispatches, particularly in the southern region. Industry sources attribute the surge in local dispatches to a commencement of reconstruction work, as well as greater inclination of the current government towards development work as elections are coming near. But the southern region has not been that lucky in the exports arena. Export dispatches from the south fell by roughly 23 percent, offsetting the minor improvement in export dispatches from the north, and plunging down the total exports for 4MFY12 over 4MFY11. The decline in exports is explained by a slump in exports via sea, while exports to India and Afghanistan saw a year-on-year rise in 4MFY12. According to industry sources, exports via sea have been declining owing to low export prices, barely enough to cover even variable costs. Consequently, manufacturers focus has been diverted towards local sales more than exports. Assessing the month of October 2011 in isolation, a paltry increase of 1 percent over cement dispatches in October 2010 was noted. Again, dwindling exports - despite a 6 percent year-on-year increase in local dispatches - explained why the increase in total dispatches for October this year was only very small. Declining exports to Afghanistan as well as those via sea were responsible for pulling down exports in October this year, even though exports to India more than doubled this month against October 2010. Ironically, while the year-on-year performance of October leaves a lot to be desired, the month has so far been the best in FY12 in terms of cement off-take, with both export and local dispatches higher than the previous three months. A month-on-month comparison shows gains in both local and export dispatches, with exports to India increasing phenomenally relative to September 2011. This overall month-on-month improvement is despite a 13 percent slump in exports via sea. So far, FY12 has been hard-hitting for the cement industry in terms of exports, though increased local dispatches offer some respite. Exports to India have been very promising, with expectations of further improvement as bilateral trade with India improves. Going forward, the industry expects local dispatches to remain upbeat, while the export side may suffer due to lower selling price; but improved exports to India may offer some respite.
==================================================== CEMENT DISPATCHES ==================================================== (mn tons) 4MFY12 YoY Oct FY12 MoM ==================================================== Local 7.3 10% 2.1 39% North 5.9 8% 1.7 33% South 1.3 23% 0.4 73% Exports 3.2 -3% 0.9 8% Afghanistan 1.8 17% 0.5 14% India 0.3 69% 0.1 119% Other, clinker (sea) 1.1 -29% 0.3 -13% TOTAL 10.5 6% 2.9 29% ====================================================
Source: APCMA
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