Cement sector sales witness record growth in local market
KARACHI: During the first half of current fiscal, cement sector continued to remain buoyant in domestic markets while exports remained under severe pressure thereby affecting the total growth in cement despatches.
Despatches during the six months, ending on December 31, 2015 increased by 6.38% to 18.21 million tonnes compared with despatches of 17.12 million tonnes during the corresponding period of 2014. “It is to be noted that this growth is mainly led by domestic consumption which increased by a healthy 16.34% to 15.2 million tonnes during July to Dec 2015 compared to 13.06 million tonnes during July to December 2014,” said a spokesman of All Pakistan Cement Manufacturers Association (APCMA).
Further analysis of despatches revealed that the factories located in north witnessed 15.32% increase in domestic consumption by selling 12.63 million tonnes in domestic markets from July to Dec 2015 against 10.96 million tonnes during same period of last year.
The South-based factories witnessed even more growth in domestic dispatches by supplying 2.56 million tonnes of cement to local markets from July to December 2015 against 2.10 million tonnes during same period of last year showing growth of 21.63%. In exports, the North-based mills registered decline of 25.09% as exports were restricted to 1.9 million tonnes in first six months of current fiscal compared to 2.54 million tonnes during same period last fiscal. The South-based factories also suffered decline of 26.67% in exports as the quantities dropped to 1.11 million tonnes from July to Dec of current fiscal compared to 1.52 million tonnes during same period of last fiscal.
The industry despatched 3.44 million tonnes of cement in December 2015 compared with 3.11 million tonnes despatched in December 2014, showing a growth of 10.53%. The local despatches were 2.98 million tonnes during December 2015 against 2.5 million tonnes during December 2014, depicting an increase of 19.28%.
The exports despatches showed decline by 25.39% as against 610,000 tonnes exports during December 2014, the industry exported 455,000 tonnes during December 2015.
During the same period, country’s exports declined by a massive 25.68% to 3.01 million tonnes compared to 4.06 million tonnes during July to Dec 2014.
The APCMA spokesman said that the government has not been able to work with the industry to arrest the decline in exports, adding that the association has time and again drawn government’s attention towards illegal imports of under invoiced cement from Iran. The industry has urged that a proper vigilance and accountability system needs to be put in place to stop cement smuggling into the country.
The government should also impose 20% regulatory duty for import of cement in addition to custom duty in order to protect local industry. The spokesman further mentioned that the government should also give due attention to reduce energy costs including removal of GIDC imposed on gas, reduction of custom duty on coal to 0% and additional incentive of 5% on export of cement by sea in order to reduce the overall cost of operations to make the Pakistani cement industry competitive globally.