Cement sales surge 22.8% in August

APCMA official says uptick in fuel price, other inputs driving up cost of production

LAHORE:

The cement sector posted a growth of 22.77% in August 2021 as total cement dispatches were recorded at 4.336 million tons against 3.531 million tons in the same month of previous year.

According to data released by the All Pakistan Cement Manufacturers Association (APCMA), local cement sales during August 2021 increased to 3.814 million tons from 2.805 million tons in August 2020, showing a healthy increase of 35.98%.

Exports, however, continued to decline as the volumes fell from 726,687 tons in August 2020 to 521,468 tons in August 2021, decreasing by 28.24%.

During August 2021, the north-based cement mills dispatched 3.141 million tons to domestic markets, an increase of 25.42% over 2.504 million tons in August 2020.

South-based mills dispatched 673,572 tons of cement to local markets during August 2021, registering a robust increase of almost 124% compared to sales of 300,750 tons in August 2020.

Exports from north-based mills declined 33.14% as shipments dropped from 212,076 tons in August 2020 to 141,804 tons in August 2021. Exports from south decreased 26.22% to 379,664 tons in August 2021 from 514,611 tons in the same month of last year.

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During the first two months of current fiscal year, total cement dispatches (domestic and overseas) were 8.235 million tons, which were 1.61% lower than the 8.37 million tons dispatched during the corresponding period of last fiscal year.

North-based mills sold 6.033 million tons of cement in domestic markets during the first two months of current fiscal year, showing a slight increase of 1.57% than the dispatches of 5.939 million tons during July-August 2020.

Exports from north declined by 17.16% to 277,422 tons during July-August 2021 compared with 334,899 tons exported during the same period of last year.

Domestic dispatches by south-based mills during July-August 2021 were 1.228 million tons, showing a healthy increase of 50.01% over 818,600 tons dispatched during the same period of last fiscal year.

There was, however, a massive decline of around 45% in exports from the south zone as the volumes reduced to 696,823 tons in the first two months of current fiscal year from over 1.277 million tons during the corresponding period of last fiscal year.

An APCMA spokesperson said that the landed price of coal, a major input for the cement mills, which cost around Rs18,000 per ton in August 2018 has increased multiple times since then and the current landed cost comes to around Rs31,500 per ton, increasing the cost of production by approximately Rs90 per bag.

Similarly, the electricity rate, which was Rs11.68 per unit in August 2018, is now Rs19.40 per unit. This has impacted the cost of production by around Rs35 per bag.

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Other input costs like packing material, provincial taxes on raw material and fuel prices have also gone up, which has increased the overall cost of production.

He emphasised that the current demand for imported coal from the cement sector is around 8.120 million tons but there is only one terminal in the country to handle all coal shipments.

Due to this, the cement industry is continuously facing delays in unloading coal shipments, resultantly paying demurrages and incurring extra costs on its operations.

The situation will further aggravate in the next two years when cement production capacity of the country will increase from 70 million tons to around 100 million tons per annum.

The spokesman added that the increase in domestic dispatches is a good sign for the cement industry, which shows that economic activity has picked up, which will help achieve higher GDP growth.

However, he added that government planners should take notice of declining exports and should support the industry to compete in international markets.