Cement exports down as Gulf demand drops

KARACHI: Cement exports slowed down in the first nine months of fiscal year 2009-10 9MFY10 as overall exports went up by a nominal 4 per cent against a massive growth of 64 per cent in the same period last year.

Farhan Bashir Khan, analyst at Invest Capital Investment Bank Ltd, said that cement exports to six Gulf Arab countries, comprising Gulf Cooperation Council (GCC), have dropped which resulted in an overall slowdown. “Construction activities in the GCC countries have slowed which resulted in a low cement demand. But at the same time our exports to African countries have surged in the last few months,” he said.

When asked for the reason behind this change, he said cement companies were tapping the African markets owing to a greater opportunity there. “Now that the African market is being targeted, local cement manufacturers in Africa are pushing their governments to place import duty on the Pakistani cement,” Khan added. African cement players have demanded an increase in duty to 35 per cent or US$50/ton on Pakistani cement. The high duty would threaten Pakistani cement exports to the region.

Khan said the impact of the inland freight subsidy, being given by the government of Pakistan, would be seen in coming months. Slowdown in exports of the sector can be attributed to lower international prices, higher inland charges forcing players from the north to refrain from contributing to exports and slowdown in demand typically in the GCC countries, Khan added. Breakup of exports reveals that Afghanistan continues to remain the major export market for Pakistani cement as it cumulatively accounted for 28 per cent of the entire exports during FY09.

Published in the Express Tribune, May 18th, 2010.