First time in six years: Domestic cement sales slip

Overall cement consumption edges up 1.98% due to higher export growth

LAHORE:

After recording a fall in demand for three consecutive months, cement sales increased 29.94% in June 2020 to 4.623 million tons from 3.557 million tons in June 2019, ending FY20 on a positive note.

According to data released by the All Pakistan Cement Manufacturers Association (APCMA), domestic cement sales increased 19.63% to 3.835 million tons in June 2020 from 3.206 million tons in June 2019. Moreover, exports rose 123.89% from 0.351 million tons in June 2019 to 0.787 million tons in June 2020.

Domestic cement consumption in the north stood at 3.384 million tons in June 2020 against 2.750 million tons in June 2019, however, exports from the northern region contracted to 46,025 tons in June compared with 0.145 million tons in June last year.

In the south, domestic consumption declined to 0.451 million tons from 0.455 million tons in June 2019, but exports surged from 0.206 million tons in June 2019 to 0.742 million tons in June 2020.

Overall, cement consumption in Jul-Jun 2019-20 edged up 1.98% to 47.81 million tons, solely on the strength of higher export growth of 19.8% that crossed the seven-million-ton mark after a long time. Domestic consumption, however, contracted almost 1% in FY20, for the first time in the past six years.

The performance of cement manufacturing units in different zones depicted the strength of south zone in exports and north zone in domestic consumption.

Furthermore, in FY20, mills in the north zone sold 34.327 million tons of cement to the domestic market, a growth of 6.07% over consumption in the previous fiscal year. However, it lost 22% of export market by exporting only 1.97 million tons.

The region lost the Indian market due to the protective policies adopted by the Indian government and the Afghan market due to a decline in construction activities in the landlocked country. In the south zone, the mills were badly hit by low consumption in the region as their sales declined 29.37% to only 5.637 million tons. However, exports registered a healthy increase of 46.47% and shipments stood at 5.877 million tons in FY20.

Cement exports were higher than the local consumption, perhaps for the first time in history. “The higher demand in June has sparked hope that the new fiscal year will be better as a result of the incentives provided to the construction sector,” said the association’s spokesman.

He appreciated the reduction in excise duty on cement but urged the government for a complete withdrawal of the duty as excise was a punitive duty imposed to curb the use of harmful goods.

Published in The Express Tribune, July 7^th, 2020.

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