Cement exports continue to slump, this time down 45%

Domestic sales, however, increase 11% in May 2017


Our Correspondent June 04, 2017
Domestic sales, however, increase 11% in May 2017. PHOTO: FAUJI CEMENT

LAHORE: Sales of cement in the domestic market accelerated 10.90% in May 2017 while exports continued to plague overall performance of the industry as shipments to overseas markets plunged 44.58% in the month.

It was the fourth massive decline in exports, which dipped 45.69% in February, 60.39% in March and 50.75% in April.

This dismal export performance has overshadowed handsome sales of cement in the domestic market.

According to data released by the All Pakistan Cement Manufacturers Association, sales in the domestic market totalled 3.399 million tons in May 2017 compared with 3.065 million tons in the corresponding month of previous year, registering a healthy spike of 10.90% and indicating a continued growth momentum.

Exports, however, fell sharply in the month, standing at 0.309 million tons compared with 0.558 million tons in May 2016.

Total sales were recorded at 3.708 million tons compared with 3.623 million tons in the same month of previous year, up only 2.36%.

In the first 11 months (July-May) of the current financial year, domestic cement consumption rose a healthy 10.76% to 37.589 million tons against 35.523 million tons in the corresponding period of last year.

Exports during the 11 months fell 21.27% to only 4.319 million tons against 5.486 million tons in the same period of previous year. Since hitting a peak at 10.8 million tons in financial year 2008-09, exports have been on a constant decline.

In May 2017, exports to Afghanistan slumped 53.03% at 0.097 million tons compared with 0.206 million tons in May 2016.

Exports to India also registered a decline, going down 15.22% from 0.135 million tons in May 2016 to 0.114 million tons in May this year. Shipments to the neighbouring country go mainly through the Wagah border and southern coast of India.

In a statement, a spokesman for the cement manufacturers association aired concern over the falling shipments to Afghanistan that came down 31.24% in July-May FY17. Exports to India, however, registered an increase of 34.61% in the 11-month period.

The spokesman decried that the government had slapped additional taxes on the cement industry. The tax burden may hurt growth of the industry that has been making healthy progress over the past 18 months.

He said sales growth had remained subdued in the past two months at 0.70% in April and 2.36% in May. “This … came despite the fact that domestic consumption of cement rose 23.09% in March, 9.53% in April and 10.58% in May,” he said.

He feared some decline in domestic demand as well in the wake of duties slapped on the construction industry.

Industry experts have appealed to the government to take steps to boost the housing sector as currently the cement industry is mostly banking on infrastructure projects.

They argue that a sustained growth in housing construction is essential to absorb the additional capacities that will come on stream in the next two years. They urge the government to avoid disruptive policies that impact the growth in construction in the country.

Published in The Express Tribune, June 4th, 2017.

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