Highest ever cement dispatches during 2013-14

Industry facing challenges to cope up with increasing costs

KARACHI - Cement dispatches to domestic markets during the month of June 2014 increased by 14.32 per cent to 2.532 million tons compared with 2.215 million tons during same month last year.

Exports during June 2014 were 685,000 tons against 665,000 tons during June, 2013 showing an increase of 2.9 per cent. Total dispatches during June, 2014 were 3.217 million tons compared to 2.88 million tons during same month last year showing an increase of 11.68 per cent.

According to the data released by All Pakistan Cement Manufacturers Association, during the fiscal year 2013~2014, cement industry dispatched 26.14 million tons in local markets posting a growth of 4.32 per cent compared with local dispatches during the same period of last fiscal year that were 25.06 million tons.

Exports from the country declined by 2.87 per cent to 8.133 million tons compared with exports during last fiscal year that were 8.37 million tons. The overall situation during fiscal year 2013~2014 showed a growth of 2.52 per cent compared to last fiscal year as total dispatches increased to 34.273 million tons against 33.432 million tons from July 2012 to June, 2013.

Looking at the statistics of past several years,Pakistanrecorded the highest ever cement dispatches of 34.27 million tons, though marginally higher than the previous high of 34.24 million tons achieved in 2009-2010. This time the increase was led by a record domestic consumption of 26.14 million tons.

A spokesman of All Pakistan Cement Manufacturers Association said that despite adverse conditions regarding government regulation of the industry and depressing export scenario the cement sector performed well. He said the exports in 2009-2010 were 10.65 million tons while the exports in 2013-2014 were only 8.13 million tons.

In fact he pointed out that the exports have been on constant decline since 2008-2009 when they peaked at 10.98 million tons. Exports declined to 10.65 million tons in 2009-2010, 9.43 million tons in 2010-2011, 8.57 million tons in 2011-2012 and 8.37 million tons in 2012-2013. He said increase in cost of cement production had negative impact on cement exports.

He said fuel is the major input in cement dispatches and the rates of gas, diesel, coal and power have been increased substantially inPakistanin last five years. He said higher economic activities in the country rescued the industry from disaster. He said it was heartening to note that the cement dispatches in the country posted three million tons plus dispatches during last four months peaking in June 2014 to a record 3.217 million tons.

He said in view of large displacement of citizens from terror prone areas there would be greater need for cement in these remote areas when rehabilitation process starts. He said placement of cement in Schedule 3 of sales tax act would be an impediment in supply of cement to these areas at reasonable rates. He appealed 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.

Recent federal budget 2014~2015 has added to the worries of cement industry as government has imposed one per cent duty on imported coal. The spokesman of APCMA stressed that coal is the only fuel on which import duty has been imposed in the recent budget which is a direct injustice to the cement industry as it is the main user of imported coal and consumes almost 95 per cent of the 4.5 million tons annual imports. Due to unavailability of gas, other industries have switched to coal so this custom duty is to nullify the positive initiative of the government to use coal as an alternate energy source.

Budget 2014~2015 has also increased the excise duty on cement and the impact will be around Rs. 2.5 per bag, said the spokesman of cement industry. He added that electricity rates have already been increased to historic high level and considering the continuous increase in input costs, coupled with the recent imposition of custom duty on coal, would leave manufacturers with no choice but to pass on these costs to the consumers.

The spokesperson of APCMA further pointed out that 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 dollars foreign exchange being earned on cement exports will be at risk. He further added that the cement sector of the country is already facing grave issues including massive load-shedding, shortage of labour, slowdown of construction activities, less exports etc therefore, this duty is just to add to the woes of the sector.

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