KARACHI, Jan 24: The cement industry people say that the current domestic demand leaves a surplus of 15 million tons of cement, and the country has an estimated export potential of 1.2 million tons of bulk cement per annum, as well as 600,000 tons of bagged cement and 1.2 million tons of clinker per annum.
New plants are coming up in various countries and will start production in the next two to three years. Pakistan can make efforts to export three million tons per annum during the next two to three years.
The cement industry, however, ruled out any dent in the domestic prices in case cement exports are enhanced in the future, executive director Lucky Cement, Abdul Razzak Thaplawala said.
He added that the industry people had discussed the issue of export of cement at length with the industries secretary in the second week of January.
He said that Pakistan’s cement industry is again in a state of recession as the annual production capacity has increased to over 35 million tons and will further go up to 39 million tons as compared to the installed capacity of 17 million tons in 2005.
The local demand is increasing, but has not kept pace with production and is likely to increase to a maximum of 22 to 23 million tons per annum, he added.
The present FOB rates for export of cement and clinker to compete with India, Indonesia and China are $47-48 per ton FOB Karachi for bulk cement, $36-37 per ton for clinker and $48-53 per ton for bagged cement.
“These rates are very low and it will be possible only to compete with these countries, if the government gives incentives,” he said, adding “without incentives the industry is quoting $53 per ton which is very high and does not compel industry people to enter export market with significant quantities.
The industry exports clinker at $37.5 per ton.
Razzak said by exporting only 20 per cent of the surplus capacity, Pakistan may well be in a position to earn $125-150 million per annum by exporting three million tons at an average rate of $45 per ton.
However, the government needs to address some of the problems of the industry so that the producers could fetch good results on the export front.
He said port costs in Pakistan are very high as compared to India, China and Indonesia.
Wharfage cost charged by the KPT is Rs40 per ton for cement and clinker export which is over 1.75 per cent of the export value while most of the cargoes attract wharfage of less than 0.25 per cent of the export value.
KPT wharfage charges need to be rationalised to the level of Port Qasim of Rs22 per ton.
The port costs ie port dues average about $0.90 per ton at KPT or Port Qasim versus 0.50 per ton in India, Indonesia and China.
He said there is no clinker or cement export terminal while in other countries it is available.
At present a token rebate of Rs25.08 per ton is allowed on cement export and there is no rebate on clinker export.
