Unimpressive exports dent overall cement sales

Demand rises only 5% to 3.94 million tons in Nov 2017

LAHORE: Cement manufacturers sold 3.941 million tons in November 2017, up 5.16% compared to the same month of previous year, showed data released by the All Pakistan Cement Manufacturers Association on Wednesday.

Though domestic cement consumption rose 9.89%, the overall growth was 5.16%, undermined by a steep decline in exports which dropped 27.11%.

In November, cement mills situated in northern parts of the country sold 2.967 million tons in the domestic market, up 10.2% than 2.692 million tons in the same month of previous year.

Domestic sales in the southern region increased 8.4% from 0.578 million tons in November 2016 to 0.626 million tons in November 2017.



However, exports from south-based mills took a major hit as they plunged 45.4% to 0.070 million tons in November compared to 0.129 million tons in the corresponding month of 2016.

Exports from the northern region decreased 8% to 0.278 million tons as opposed to 0.350 million tons in November 2016. The export slowdown continued in the first five months (Jul-Nov) of the current fiscal year as shipments dipped 18.22% to 2.079 million tons against 2.542 million tons in the corresponding period of previous fiscal year.

Overall, the industry sold 2.261 million tons more cement in Jul-Nov FY18, which was 13.91% higher than sales in the corresponding period of previous year. Capacity utilisation of the industry came in at 94.65% in five months.

Industry players say they are worried over the complacency shown by economic planners towards the cement sector.

“The cement sector has so far withstood the impact of decline in exports due to a robust growth in the domestic market. However, the current political uncertainty may impact domestic growth too,” feared the association’s spokesman in a statement.

“The industry’s woes are compounded by the fact that more production capacity is expected to be commissioned in the next three years, starting January 2018.”

The spokesman pointed out that while all the previous issues raised by the manufacturers in the past few months had remain unaddressed, an increase in duties on coal import pushed up the production cost.



He emphasised that higher cement consumption did not mean that the government should impose duties on inputs instead of providing relief to the industry that had been badly hit by the weakness in exports. He asked the government to honour its commitment of withdrawing the excise duty in a phased manner.

“The government can generate revenue from stopping the smuggling of cement from Iran and under-invoicing as inaction is not only disturbing the industry but is also eating away a major chunk of the revenue,” he added.

Published in The Express Tribune, December 7^th, 2017.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.