Total cement dispatches, including local sales and exports, in June 2014 have reached a record level of 3.21 million tons, up 11.5% compared to the 2.88 million tons during the same month in the previous year.
Domestic cement sales in the last month of the outgoing fiscal year 2014 (FY14) increased 14.32% to 2.53 million tons compared to the 2.21 million tons during the same month of the last fiscal year. Cement exports during June have also shown an increase of 2.9% as they touched 685,000 tons against 665,000 tons.
According to the data released by All Pakistan Cement Manufacturers Association (APCMA) – the representative body of all cement makers – the cement industry dispatches in local market touched 26.14 million tons in FY14, up 4.32% compared to 25.06 million tons during the same period of the last fiscal year.
The overall country’s exports declined 2.87 % to 8.133 million tons compared to exports during the last fiscal year in which it remained 8.37 million tons. The combined figure of local sales and exports in FY14 reached 34.27 million tons, up 2.52% compared to 33.432 million tons in FY13.
The APCMA spokesperson said that despite adverse conditions regarding government’s regulation of the industry and the depressing export scenario, the cement sector performed well.
He said exports in 2009-10 were 10.65 million tons, while in 2013-14 they were only 8.13 million tons. “The exports have been on a constant decline since 2008-09 when they peaked at 10.98 million tons,” said the spokesperson. “The increase in cost of cement production has had a negative impact on cement exports.”
He further added that fuel is the major input in cement dispatches and the rates of gas, diesel, and coal have been increased substantially in Pakistan in the last five years. The higher economic activities in the outgoing fiscal year rescued the industry from disaster, he added.
He said it was encouraging to note that the cement dispatches posted 3 million tons plus dispatches during last four months peaking in June 2014 to a record 3.21 million tons.
“In view of the large displacement of citizens from terror prone areas there would be greater need for cement in remote areas when the rehabilitation process starts,” he said. “The placement of cement in Schedule 3 of the sales tax act would be an impediment in supply of cement to these areas at reasonable rates.”
He appealed to the government to act in time to ensure availability of this essential commodity to the displaced persons at cheaper rates by taking cement out of Schedule 3.
Coal import duty hurting the industry
The APCMA spokesman stressed that coal is the only fuel on which import duty has been imposed in the recent budget which is injustice to the cement industry as it is the main user of imported coal and consumes almost 95% of the 4.5 million tons annual imports.
Due to unavailability of gas, other industries have switched to coal and many others are also switching, so this custom duty is to nullify the positive initiative of the government to use coal as an alternate energy source.
“The cement industry has spent millions of dollars in converting its plants from the expensive furnace oil to coal in order to reduce the cost of production.
Our product will become uncompetitive in the global markets and, as a result, the precious $500 million foreign exchange being earned on cement exports will be at risk,” he concluded.
Published in The Express Tribune, July 6th, 2014.
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