Cement supplies disrupted

Supplies of cement all across Pakistan have been disrupted due to excessive flooding in all provinces.

KARACHI: Supplies of cement all across Pakistan have been disrupted due to excessive flooding in Punjab, Khyber-Pakhtunkhwa and parts of Sindh.

“Although no major damage has been caused to cement manufacturing plants, supply lines for the transportation of raw materials as well as shipment of finished goods have been severely affected,” commented General Secretary Pakistan Cement Manufacturers Association, Brigadier Niazi.

“Dera Ghazi Khan has been completely cut off from the rest of the country. This has left Dera Ghazi Khan Cement Company unable to transport materials from their facilities,” he pointed out while explaining the extent of the disturbance.

Similarly, other cement manufacturers including Nizampur, Kohat, Cherat and Lucky are unable to access road and rail routes for freight transport.

He also revealed that the factories of Maple Leaf Cement and Kohat Cement have been inundated. “Flood waters are receding so we expect both these factories to be cleared of water within the next few days but supplies will not be restored to optimum levels as long as the road and rail networks remain flooded,” said Niazi.

Meanwhile, the supply of raw materials, including clinker and chemicals, is also dependent on the restoration of road and rail links, particularly from Khyber-Pakhtunkhwa and Karachi Port. Niazi highlighted that the road connecting Peshawar and Nowshera has also been submerged and exports to Afghanistan will not resume until this route is re-established.

One analyst pointed out that some cement factories maintain enough coal reserves to last three months. If these deposits are flooded, the coal may be rendered useless. Falling prices of coal in the international market could further erode profitability since local firms would be forced to book losses at market prices.

“In the short term the current crisis is troublesome for local cement manufacturers and we are expecting them to take a hit in the next quarter,” said Farhan Bashir, a research analyst at InvestCap.

However, he pointed out that once reconstruction activities start there will be a significant increase in the demand for cement and this is expected to work well for the same companies.

“The important thing is that no major damage has been done to the infrastructure of these manufacturers so they will be able to start churning out supplies once the water recedes from these areas,” commented another analyst.

Experts say that the restoration of cement supplies will be crucial to reconstruction activities once flood waters recede.

Published in The Express Tribune, August 10^th, 2010.