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Cement despatches go up 14pc

Updated December 07, 2017

KARACHI: Despatches by the cement industry increased by 14 per cent or 2.261 million tonnes in the first five months of 2017-18 on a year-on-year basis.

According to the All Pakistan Cement Manufacturers Association (APCMA), capacity utilisation remained 94.65pc during the five-month period.

Although the increase recorded in domestic consumption in November was 10pc, sector-wide growth stood at 5.16pc because of a decline of 27.11pc in exports. In November, north-based mills sold around 3m tonnes locally, up 10pc from 2.69m tonnes a year ago. Local despatches in the southern region rose 8.4pc to 0.62m tonnes last month.

However, exports from south-based mills took a hit as they went down 45pc to 0.07m tonnes in November on an annual basis. Exports from the northern region also decreased 8pc to 0.27m tonnes last month.

Exports in the first five months of 2017-18 plunged 18.22pc to 2.08m tonnes.

The APCMA spokesperson said the industry has so far withstood the impact of a fall in exports due to a robust growth in the domestic market. However, he feared that current political uncertainty may impact domestic growth as more capacities are expected to be commissioned in the next three years.

All issues that the APCMA raised in the last few months have remain unaddressed, he said, adding that the hike in duties on coal has increased the cost of production.

The increased consumption of cement does not mean that the government should feel free to impose duties on its input, he said. The government should also honour its commitment about withdrawing the excise duty in a phased manner, he added.

The government can generate revenue by curbing under-invoicing and cement smuggling from Iran, the spokesperson noted.

According to Topline Securities analyst Nabeel Khursheed, free-on-board coal futures price reached $94 per tonne while the average price in 2017-18 so far has been $89 per tonne.

The reasons for a hike in international coal prices include China’s curb on domestic coal production as this source of fuel accounts for about 60pc of the country’s energy consumption. This led to an increase in its coal imports.

In addition, the consolidation of a small number of coal mining companies that dominate the industry in Australia along with India’s ban on the use of petcoke in Uttar Pradesh, Haryana and Rajasthan in November also led to a hike in global coal prices.

Quoting media sources, he said more than 70pc fuel requirement of Indian cement producers is met through petcoke. He said a further hike in coal prices could not be ruled out.

Published in Dawn, December 7th, 2017