ISLAMABAD: The government is working on two options to challenge South African anti-dumping duties on Pakistan’s exports of cement.

“We are analysing the detailed report of International Trade Administration Commission of South Africa (ITAC) to determine our course of action,” an official of the Pakistan National Tariff Commission (NTC) told Dawn on Friday.

The first step, the official said, will be to hold bilateral consultations with the South African government to resolve the anti-dumping duties favourably. If that could not happen, then Pakistan’s government has the option to take the issue to the Geneva-based World Trade Organisation (WTO), the official added.

The NTC is awaiting response from Pakistani exporters. “We have asked them to share with us the questionnaires which they have filled in and submitted to the ITAC,” the official said.

Pakistan is the only supplier of cement to South Africa at a price lower than the local cement.

The ITAC has imposed provisional duty for a period of six months at 14.29 per cent on Lucky Cement, followed by Bestway 77.15pc, DG Khan 68.87pc, Attock Pakistan 63.53pc, and other cement makers 62.69pc. The duty was imposed on the request of four South African manufacturers of cement — Afrisam (Propriety) Ltd; Lafarge Industries South Africa (Propriety) Ltd); NPC Cimpor (Propriety) Ltd and PPC Ltd.

Lucky is the major supplier to South Africa having share of 55pc in the market, which seems to have been little affected by the duty because it was the lowest as compared to other competitors. Attock is the second largest supplier with 35pc and was the worst-hit keeping the volumes and duty imposed on it.

According to the ITAC report, the duty was imposed on the market for bagged cement which was the main exports from Pakistan, while the market for bulk exports did not fall under its purview.

Pakistan’s cement exports to South Africa were 142,806 tonnes in 2010 which jumped to 1,091,235 tonnes in 2013. This is a huge jump in increasing exports of cement to South Africa which emerged second biggest market after Afghanistan for cement exports.

Pakistani cement production increased by 2.3 million tonnes to 44.8 million tonnes in 2013 from 42.5 million tonnes in 2010 .

According to BMA Capital Management, the Pakistani cement industry will likely add an additional 8.9 million tonnes to its current annual capacity of 45 million tonnes by the end of 2017.

The Pakistani cement industry therefore has a large and increasing production capacity. Pakistan’s exports to Afghanistan and India are declining. This decline in exports has been attributed to competition from Iranian exports in Afghanistan and weakening demand in India.

The departure of US forces from Afghanistan will also reduce demand for cement in that country. The excess volume of cement would have to be exported to other markets which in all probability would be the South African market.

According to the trade officer, Pak­is­tani exporters are also exploring markets in the neighbourhood of South Africa. The exports of cement have also started to Mozambique, Tanzania etc, the official added. These will be alternative productive markets in case ITAC convert the provisional duty into permanent which will prevail for the next five to six years.

Published in Dawn, May 30th, 2015

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