Cheap cement dumping owing to excess regional capacity
The country is facing a case of cement dumping by growing cheap cement importers, a concern some experts raised recently.
With rapid urbanisation this has been happening for a while now – as long as three years, says Asanka Dissanayake, Siam City Cement Regional Controller. “The region has a lot of excess cement capacity. So owing to their excess capacities most firms in the region sell at variable cost margins which means most of the cement is imported to the country at low cost,” he told the Business Times. Also the local price of cement is the highest in the region which makes it easier for the cheaper imports to sell.
Sri Lanka’s cement production rose 19.7 metric tonnes (mt) to 1.041 million mt in the first five months of 2016 and imports rose 18.4 per cent to 1.888 million mt, official data show. Mr. Dissanayake noted that India has a lot of excess capacity.
The Cement Manufacturers Association (CMA) says that the local cement industry has 100 mt per year (Mt/yr) of excess production capacity out of a total 425 Mt/yr. The sector in India is sitting on over US$ 9.4 billion of ‘sunk investment in surplus capacities’.
Mr. Dissanayake noted that Pakistan, Oman and Dubai are also swamped with excess capacity. He added that certain tea exporters to these countries backhaul their shipments by importing cement. These are mostly small scale importers which account for 18 – 20 per cent of the total cement importers, he said.
Cement consumption is considered to be a major source of economic growth, development and economic activities which plays a key role in generating income in both formal and informal sectors by offering job opportunities to millions of unskilled, semi skilled and skilled workers.