Cement sales plummet as construction grinds to a halt

Updated Jun 04 2020

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The decline in cement despatches is also mainly due to Ramazan, the pandemic and Eid holidays which slowed the construction activity. — AFP/File
The decline in cement despatches is also mainly due to Ramazan, the pandemic and Eid holidays which slowed the construction activity. — AFP/File

KARACHI: Domestic cement uptake fell for the third consecutive month in a row as despatches during May declined by 38 per cent to 2.27 million compared to 3.64m tonnes during the same month last year.

“The negative growth is due to the impact of Covid-19 and the delay in implementing public sector development projects, while the impact of construction package announced by the government is yet to be seen,” said All Pakistan Cement Manufac­turers Association (APCMA) spokesperson on Wednesday.

The decline in cement despatches is also mainly due to Ramazan, the pandemic and Eid holidays which slowed the construction activity, he added.

Exports during the month also fell by 25pc to 0.363m tonnes from 0.483m tonnes in May 2019, the APCMA data showed.

Domestic cement consumption in the north fell to 2m tonnes against 3.05m tonnes during the same month last year, while consumption in south declined to 0.269m tonnes from 0.589m tonnes in May 2019.

Meanwhile, exports from north declined to 7,520 tonnes in May compared with 0.164m tonnes in the same month last year. The exports from the southern zone — hub of cement exports in the country — also fell to 0.356m tonnes during the month under review.

During the first 11 months of the current fiscal year, total cement despatches inched down by 0.32pc to 43.189m tonnes, compared to 43.327m tonnes during the same period last fiscal.

Domestic consumption during the year plunged to 36.13m tonnes from 37.14m tonnes last year. However, during the 11MFY20, exports increased by 14pc to 7.059m tonnes from 6.188m tonnes in the corresponding period last fiscal year.

Domestic despatches by the north-based mills stood at 31m tonnes during July-May 2019-20 against 29.61m tonnes during the same period last year, up by 4.49pc. However, exports from the region, during the period under review, dropped by 19.24pc to 1.924m tonnes.

The south-based mills despatched 5.18m tonnes locally during the first 11 months of this fiscal year, down 31pc from 7.53m tonnes during the same period last year. Exports, however, registered a healthy increase of 35pc from 3.81m tonnes to 5.13m tonnes during the period under review.

APCMA spokesperson said the sector has been in dire state for the last few months. After posting 31pc growth in domestic cement consumption in February, the sector has seen consistent declines in March, April and May.

Exports grew by 48pc in February but came down by 5.67pc in March, 56.60pc in April and 24pc in May, he added.

The government should realise that the construction sector is the largest provider of employment to the unskilled workforce in the country and decline in cement consumption means low construction and substantial increase in unemployment in the country, he added.

Top Line Securities, while quoting the Pakistan Bureau of Statistics data said the average cement prices in north region during May 2020 were Rs520 per 50kg bag compared to Rs510 in April 2020.

However, prices in south region remained unchanged at Rs620-630 per bag.

Published in Dawn, June 4th, 2020