LAHORE, Oct 5: Cement sales grew by 9.3 per cent to 4.474 million tons during the first quarter of the current fiscal year as compared to 4.093 million tons in the corresponding period last year.

Exports of cement during the period under review registered a decline of 3.39 per cent over the corresponding period last year whereas domestic demand grew by 10.85 per cent, said the All Pakistan Cement Manufacturers Association (APCMA) in a press release on Wednesday.

“Increased consumption in the domestic market augurs well for the future and reinforces the fact that the GDP growth is heavily reliant on continuing quick pace of construction activity,” the release said.

During the period under review, the overall capacity utilization increased to 92.15 per cent from an expanded capacity base made available by optimization of production capability undertaken by several plants.

The first of the new kilns has also come into operation in the last month and additional capacity will come on stream during the remaining part of the financial year, it said.

During this period, upon recommendations of the APCMA, the government has permitted duty-free import of cement to meet any temporary shortages that might occur before the expansion in capacity becomes operational by mid 2006.

“However, owing to high demand in the petroleum-rich countries and for reconstruction work in the tsunami-hit areas, cement supply position remains tight all over the world. Extremely high energy and transportation costs have led to a price hike in this commodity in the international markets and it will be a real challenge to maintain the cement prices at the current levels in view of sharp increases in the cost of production and transportation,” the APCMA said.

The APCMA views with some concern that despite making all efforts to increase supplies in the domestic market including despatches on holidays, prices in the open market continue to rise. “This is owing to a combination of factors particularly due to high demand and sharply increasing cost of production because of interest rate hike, increase in the price of energy and sharply escalating transportation costs. While all efforts are being made by our members to expedite work on the new kilns so larger supplies become available, it would be in order to reiterate that the only way the consumer could be immediately benefited is to do away with the continuing levy of excise duty and sales tax amounting to approximately Rs70 per bag,” it said.