KARACHI: Cement despatches during the first quarter of this fiscal year posted a moderate growth of 4.5 per cent and reached to 10.8 million tonnes, according to data released by the All Pakistan Cement Manufacturers Association (APCMA).

The cement sector is divided into two regions with northern region making up for more than 75pc of total production and sales. The local cement sector is going through an expansionary cycle due to the rise in domestic and regional demand. Cement producers are expected to add 26m tonnes of additional capacity by 2021.

Cement manufacturers have benefited immensely from increase in public sector expenditure, China-Pakistan Economic Corridor (CPEC) led infrastructure projects and will likely enjoy similar demand beyond the current fiscal year as government’s plan to build Diamer-Bhasha and Mohmand dams will increase domestic demand by 40-50m tonnes.

The sector’s capacity utilisation during the three months clocked in at 80pc against average capacity utilisation of 87pc during last three years with Northern manufacturers despatching 7.151m tonnes, down 5pc from 7.523m tonnes last year.

The region’s exports during the quarter fell by 22pc to 0.747m tonnes compared to 0.953m tonnes same period last year.

Pakistan’s cement exports have declined consecutively for the last seven years following imposition of anti-dumping duties importing countries, rupee depreciation erasing competitiveness and higher margins.

In South, domestic consumption in the first quarter increased by 21.51pc to 1.870m tonnes against last year with exports increasing by a massive 212.13pc to 1.044m tonnes.

Cement sector’s despatches in the domestic market during September jumped by 18.9pc to clock in at 3.806m tonnes on the back of increasing local consumption and buoyancy in exports.

In September, industry despatched 3.8m tonnes against 3.2m tonnes last year. Domestic despatches from Northern region reached 2.45m tonnes, up by 3.45pcent, whereas, despatches from Southern region clocked in at 0.641m tonnes up by 49pc from same month last year.

Cumulative exports, from both regions clocked in at 0.715m tonnes with north and south based producers exporting 0.294m and 0.421m respectively.

Cement sector continues to remain under pressure from rising international coal prices, rupee depreciation, imposition of additional duties and taxes and high interest rate environment which are likely to hurt the sector’s profitability during the current fiscal year.

Published in Dawn, October 10th, 2018