Raw material: Cement sales edge down 0.5% in May

Exports fall but local demand remains robust.

KARACHI: Cement sales in May dropped slightly by 0.5% year-on-year (YoY) to 3.05 million tons despite an increase of 8.1% in demand in the country, according to data released by the All Pakistan Cement Manufacturers Association (APCMA).

Local cement demand has been triggered by private housing schemes coupled with government’s infrastructure projects.

However, cement exports dipped by 26.6% to 0.56 million tons as exports from the northern region fell by 26.8% to 0.38 million tons, Taurus Securities reported on Wednesday.



Cumulatively, cement sales in 11 months of fiscal year 2015 depicted a meagre improvement of 3.5% to 32.1 million tons. However, exports continued to disappoint, posting a decline of 10.8% at 6.6 million tons. Sea-based exports improved by 4.5% to 2.55 million tons, while exports from the northern region squeezed by 18.3%, mainly due to a fall in shipments to Afghanistan because of continued political turmoil and dumping of Iranian cement.

Budget benefits

The Finance Bill 2015 has more positives than negatives for the cement sector, as the highest-ever allocation of Rs1,513 billion (including provincial allocation of Rs813 billion) will trigger domestic demand.

Furthermore, concessions to the builders and developers including the suspension of minimum tax on the builders, sales tax exemption for brick and crushed stone manufacturers and reduction in customs duty on the import of construction machinery are expected to spur volumetric growth.

On the other side, the imposition of 5% import duty on coal (previously 1%) will have a negative bottom-line impact of 2-3% in fiscal year 2016.

Published in The Express Tribune, June 11^th,  2015.

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