Domestic cement sales unexpectedly fall 13.7%

It marks first decline in domestic consumption in past three years

LAHORE: Exports were the saving grace for Pakistan’s cement industry in August 2018 as domestic consumption unexpectedly fell 13.73% - the first such decline in the past three years.

According to data released by the All Pakistan Cement Manufacturers Association (APCMA), domestic sales stood at 2.895 million tons in August, of which 2.326 million tons were sold by mills located in the northern part of the country. The remaining 0.569 million tons were sold by south-based mills.



In the corresponding month of previous year, the north zone sold 2.730 million tons and southern mills dispatched 0.625 million tons.

On the other hand, cement exports rose 35.82% in August 2018 as 0.557 million tons were shipped to overseas markets against exports of 0.409 million tons in August 2017.

Domestic cement sales in first two months of the current fiscal year edged down 5.31%. From the north zone, sales fell 8.80% while from the south they dropped 10.91%.

Exports from the north zone dipped 29.66% whereas from the south, they surged 158.40%. The abrupt decline in domestic cement offtake has taken the manufacturers by surprise.



A spokesman for the cement manufacturers association remarked that the industry was expecting a slower growth in August as witnessed a month earlier, but never anticipated the decline. “This may be due to a change in government after elections as the pace of work on development projects gets affected in the process,” he explained, expressing hope that it would be a one-off decline and growth would resume in coming months.

“The industry is worried because it has made tremendous investment to increase its capacity which has now crossed 50 million tons a year,” the spokesman added.

“This expansion has been made on the assumption that construction activities will continue to grow at a rapid pace in the long run.”

He pointed out that the manufacturers were not worried when domestic cement sales grew a little over 4% in July 2018 and blamed the slower growth on hectic election activities before polls on July 25 in the country.

However, he said, things should have normalised in August and it was a matter of concern for the industry that they didn’t. In July 2018, the overall growth in the industry was 5.1% while in August the growth was negative 8%. “The industry is still hopeful of a rapid turnaround as the new government has promised to construct one million new houses every year. Once this programme is energised, the growth will accelerate,” he emphasised.

Published in The Express Tribune, September 6^th, 2018.

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