Weak demand, exports restrict cement sales

Demand rises only 2.8% as industry runs at 69% capacity.


Our Correspondent October 12, 2012

LAHORE: With cement plants operating at 69% of installed capacity, the industry is worried over weak domestic demand in the first three months of the current financial year and a continuous decline in exports.

In a statement, a spokesman for the All Pakistan Cement Manufacturers Association said in July-September 2012 the industry sold 7.707 million tons of cement, slightly higher than sales of 7.496 million tons in the corresponding quarter of previous year.

Local demand increased by 5.3% during the quarter, but exports fell by 2.68%, reducing the overall rise in sales to 2.81%, shows data released by the association on Thursday.

In September, cement plants in the northern part of the country sold 1.499 million tons in the domestic market and exported 633,867 tons. In the south, the manufacturers sold 294,041 tons of cement in the domestic market and exported 184,182 tons.

Exports to India have been on a constant decline ever since the two countries liberalised bilateral trade. “The decline is not due to lack of demand in India, but because of stringent non-tariff barriers put up by our neighbour,” the spokesman said, adding Pakistan’s cement was preferred because of better quality.

The government’s failure to push India to remove the trade barriers actually denied Pakistan a lucrative market just across the border, he remarked.

The spokesman claimed that total production capacity of the cement industry increased to 44.768 million tons per annum, but said low capacity utilisation was particularly painful for units which enhanced their capacities recently.

He cited debt servicing as a major cost component, saying even after three interest rate cuts in the past six months, the effective mark-up on loans for the industry was well above 12%. He called for some specific interest rebate to keep the industry afloat.

Published in The Express Tribune, October 12th, 2012.

 

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