Cement production capacity projected to rise by 26m tons

Govt’s infrastructure projects prompt industry to plan output boost

Our Correspondent January 05, 2017

LAHORE: Encouraged by consistent domestic demand and government’s focus on a host of infrastructure projects, the cement industry has planned to increase its capacity by 26.25 million tons over the next two to three years to support a smooth growth of the national economy.

Reviewing the six-month performance of the industry, All Pakistan Cement Manufacturers Association Chairman Sayeed Tariq Saigol said sales of the industry rose 8.6% and reached 19.81 million tons in the first half (July-December) of current fiscal year 2016-17.

“The growth trend indicates that in the next two years the current production capacity of 46 million tons will be insufficient to meet domestic demand. The industry is making massive investments to add new capacities,” he said.

He anticipated that the capacity would increase to 72.25 million tons in the next two to three years with additional domestic sales of 26 to 28 million tons.

Saying that cement consumption was considered a strong barometer of economic growth, Saigol asked the government to consider reducing taxes in order to give a boost to cement demand.

He boasted that cement was one of the most technologically advanced industries that had made inroads even into the Indian market despite tariff and non-tariff barriers. “Pakistani industry should also be protected in the same manner,” he said.

In the 2016-17 budget, the government increased taxes on cement from Rs600 to Rs1,000 along with 17% sales tax. The increase would take government revenue on cement sales from the previous Rs2,492 to around Rs3,250 per ton, he said.

According to data released by the association, domestic cement sales grew 11.07% in the first half of current fiscal year compared to dispatches in the same period of previous year. Exports, however, fell 3.53% in July-December 2016.

Overall, cement sales rose 8.65% in the first half compared to the corresponding period of previous year.

In December alone, domestic sales were 3.186 million tons, up 6.74% compared to December 2015, whereas exports stood at 0.369 million tons, down 18.98%.

Total dispatches in the month were 3.555 million tons, showing a growth of 3.33%. Capacity utilisation in December 2016 was recorded at 90.88%.

Exports to Afghanistan fell from 0.201 million tons in December 2015 to 0.149 million tons in December 2016, a decline of 25.72%.

Published in The Express Tribune, January 6th, 2017.

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