Hitting exports: South Africa places duty on Pakistan’s cement exports

Will range from 14% to 77% for different companies; will initially be levied for six months

KARACHI:

After a nine-month investigation, South Africa has slapped anti-dumping duty on Pakistani cement. The duty ranges from 14% to 77% for different cement companies and will initially be levied for a period of six months, which could be extended to five years.

“This anti-dumping duty will hit our cement companies but the hit will not be too big. Soon, these companies will find new markets and recover from the loss,” AHL Research analyst Tahir Abbas said.

The duty has been imposed on Pakistan’s cement exports to South Africa for six months until November 2015. During this period, individual company cases can be reviewed by relevant authorities to finalise anti-dumping duty for a period of five years, as per a notice issued by the South African government.

The anti-dumping duty imposed on Lucky Cement is 14.3%, 63.5% on Attock Cement, 68.9% on DG Khan Cement, 77.2% on Bestway Cement and 62.7% on other cement manufacturers.

Analysts believe that Lucky Cement is most likely going to increase its market share in South Africa because of the lowest duty imposed on it compared to other players.

“The profit margins of Lucky Cement may trim down but it will play on its volumetric gains. After this anti-dumping duty, Lucky will also get the share of other Pakistani companies in South Africa,” Abbas added.

For other cement companies, he said, they could find new markets in Sri Lanka, Iraq and Mozambique. Apart from some initial market entry problems like getting low prices, Pakistani cement companies will get over the South African anti-dumping smack, he added.

Despite a two-year low in cement exports, analysts say that companies would try to continue their export presence for a local market that is saturated and has been divided into various marketing arrangements among companies.

Based on the information obtained from the industry, Taurus Securities said that since the duty has been imposed provisionally for a period of six months, Pakistani cement exporters are most likely to appeal against the decision.

South African cement makers filed a formal appeal against heavy imports of cement from Pakistan. The investigation started on August 22, 2014 in which dumping margins for Pakistan were determined at 48%.

South Africa is the biggest market of Pakistani cement in terms of sea route where approximately 1.1 to 1.3 million tons of cement (20% of total cement exports and 3% of total volumetric sales) is sent.

The retail price of cement manufactured by South African players stands at $130 per ton while prices in other African nations is $5-10-per-ton lower. On the other hand, Pakistan’s cement players export at around $120 per ton to South Africa.

Published in The Express Tribune, May 16^th, 2015.

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