Sustaining growth: Cement industry playing on volume

Says they will not increase prices despite rise in excise duty.


Our Correspondent June 20, 2014
Industry officials said that the sector has shown a strong growth despite higher cement prices. PHOTO: FILE

KARACHI:


Industry officials have said that companies are not going to increase cement prices mainly due to better sales data over the last few months.


Industry officials pointed out that the expected capacity utilisation for the year 2013-14 would be around 80%, as the cement sector has posted dispatches of over 3 million tons during each of the past three months.

The industry is well-poised for another 3-million-ton dispatch in June and the overall number in the ongoing year is expected to remain at all-time high.

Cement sector expected that the domestic demand will increase further due to an uptick in economy and the overall construction activity. Development projects launched by the federal and provincial governments are expected to further boost the need for cement in the country.



However, industry officials expressed concerns that instead of reducing excise duty on cement in line with the stated government policy, it has levied a further Rs50 per ton on manufacturers.

Industry experts indicated that the additional excise duty will add Rs2.5 to the cost of a 50-kg bag and the duty on coal will further increase prices as fuel is the major component of production.

According to the Economic Survey of Pakistan 2013-14, construction sector has posted exceptional growth of 11.3% in the fiscal year ending June 30, 2014 compared to the dismal growth of negative 1.7% in the previous fiscal year.

The recovery of the construction sector was so impressive that it surpassed the government’s estimates by a wide margin. The government was expecting 6% growth in the construction sector in the outgoing fiscal year.

Cement sector analysts said that the construction industry has shown a strong growth despite having a huge increase in the prices of cement – one of the most important ingredients in the construction industry – in last one year.

Cement is an integral raw material of almost all activities undertaken by the construction sector which is the main source of employment for the unskilled labour force in the country. In such a situation, cement industry believes, where construction sector has been experiencing double-digit growth, it would have been prudent to further facilitate construction related industries in order to accelerate the attained growth.

Published in The Express Tribune, June 21st, 2014.

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