Though cement exports have dropped 14 per cent in the current financial year, a ray of hope has emerged after most of the cement manufacturers got a green signal for export of the commodity to India.
Producers in the northern part of the country have started exporting cement to India after BIS (Bureau of Indian Standards) certification was renewed for majority cement exporters in the current month. Licences of around 90 per cent cementmakers had expired earlier in the year, leading to a considerable slowdown in exports.
This resumption of sales will lead to an increase of 80,000 to 100,000 tons in cement exports in the current fiscal year and 500,000 to 800,000 tons in the next two years, according to Topline Securities.
“India will create some enthusiasm for local producers in the north as increasing construction activities in India would keep the grey cement demand alive for the foreseeable future,” said Topline Securities analyst Furqan Punjani in a research note.
The Indian government is expected to allocate $1 trillion for housing construction during the next five years, which will boost the demand for cement in the country.
Few major producers have started exports to India this month including DG Khan Cement, Lucky Cement, Maple Leaf Cement and Lafarge Pakistan Cement.
Overall, Pakistan’s exports stood at 6.72 million tons in the first nine months of the current fiscal year, of which 382,000 tons or 5.68 per cent went to India, according to the All Pakistan Cement Manufacturers Association.
Cement, the 12th top exported product, earned $245 million for exporters during the first half of fiscal 2011, according to the Trade Development Authority of Pakistan.
More capacities to come online in India
India enjoys huge effective cement manufacturing capacity of 261 million tons, which is expected to increase to around 290 million tons by fiscal 2013 due to new production plants coming online.
Cement prices in India are hovering around Rs570 per bag (300 Indian rupees), hence, profit margins on export to India could be much more than those made on exports to Afghanistan. The current export price to Afghanistan is hovering around Rs225 per bag.
Published in The Express Tribune, April 19th, 2011.
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