Date: 09/1/2016
KARACHI: Cement sector remained buoyant locally during the last six months but exports remained under pressure, affecting the pace of growth in cement dispatches.
Dispatches increased by 6.4 per cent to 18.21 million tonnes during July-December 2015 as compared to 17.12m tonnes during the same period of 2014 due to increased domestic consumption which was up by 16.34pc to 15.2m tonnes as compared to 13.06m tonnes during July-December 2014.
The All-Pakistan Cement Manufacturers Association (APCMA) said that exports declined by 26pc to 3m tonnes as compared to 4.06m tonnes during July-December 2014.
Factories located in north witnessed 15.32pc rise in domestic consumption as 12.63m tonnes of cement was sold in the domestic market in the last six months as against 10.96m tonnes during the same period of 2014.
South-based factories supplied 2.56m tonnes of cement to the local market as against 2.10m tonnes in the same period 2014, up by 22pc.
In exports, north-based mills registered a decline of 25pc as exports remained restricted to 1.9m tonnes as compared to 2.54m tonnes.
Factories in South also suffered a decline of 26.67pc in exports as quantity dropped to 1.11m tonnes in July-December 2015 as compared to 1.52m tonnes during the same period of 2014.
A spokesman for the association said that the industry had time and again drawn the attention of the government towards illegal imports from Iran or its under-invoicing. A proper vigilance and accountability system needs to be put in place to stop cement smuggling,” he said.
The government, the spokesman said, should impose 20pc regulatory duty on import of cement in addition to Customs Duty to protect the local industry.
The spokesman said the government should also give due attention to reduce energy cost, including removal of Gas Infrastructure Development Cess (GIDC) on gas, reduction of Customs Duty on coal to zero per cent and additional incentive of 5pc on export of cement by sea to reduce overall cost of operations to make Pakistani cement industry competitive globally.
Nabeel Khursheed of Top-Line Securities believes that start of construction projects under China-Pakistan Economic Corridor (CPEC) would be key to growth of cement industry.
On the cost side, international coal prices, which make up significant portion of the cost of cement manufacturing, have tumbled to near 10-year low of $52 per tonne. Crumbling coal prices, along with lower electricity charges, are likely to support margins of cement players going forward.
In the fiscal year 2016, he said, Pakistan’s cement sales may grow by 3.5pc year-on-year in the fiscal year 2016 to 36.7m tonnes (82pc capacity utilisation).
Local sales are likely to reach 31.5m tonnes, up 11.4pc year-on-year while exports are expected to decline by 28pc to 5.2m tonnes, he added.
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