LAHORE, Oct 15: Domestic consumption of cement has grown by 23.74 per cent to 3.647 million tons during the first quarter, July-September, of the current fiscal year 2004-05 as compared to the corresponding period last year.

All Pakistan Cement Manufacturers Association (APCMA) chairman Tariq Sayeed Saigol on Friday termed the growth as a record. Cement exports also went up to 445,000 tons, showing a rise of 69.28 per cent over the corresponding period last year.

Thus total sales of cement rose to 4.093 million tons, showing an aggregate increase of 27.48 per cent which means the capacity utilization of 82.94 per cent (excluding exports) and 93 per cent (including exports). "It is a record performance, and augurs well for the industry," said Mr Saigol.

He said the encouraging performance during this financial year "leads us to believe that the demand and utilization of cement is going to continue during the second quarter despite the fact that there will be reduction in demand during Ramazan and Eid holidays as well as a fall in outlay in the Northern Areas and Afghanistan due to the onset of winter."

However, he said, as both public and private sector construction programmes "reach different levels of implementation and preparations are afoot for the lining of canal programme to commence operations, it could reasonably be expected that despite the negative reasons, capacity utilization inclusive of exports should remain above 90 per cent in the second quarter as well."

Mr Saigol said: "It is encouraging for the cement sector, which continues to gear up its balancing and modernization efforts, and work has started on at least five new projects.

These plants are scheduled for completion during 2006-07 and it can be expected that by the end of the current fiscal year, capacity utilization may reach around 100 per cent."

He said the prices had been maintained by the industry despite strong increase in the input prices, particularly coal. "Prices of the Kraft paper which had reduced owing to decrease in import duty in the budget have again increased as the concession was withdrawn.

This is expected to impact negatively on the packing costs. Transport costs are also on the increase owing to fuel price rise. It remains to be seen if the selling prices will be able to be maintained at present levels in view of these adverse developments."

Lastly, he said, the increasing demand in the South has led to imbalance in the supply-demand situation and efforts were under way to push more product from the North so as to keep the prices stable and meet the rising demand for cement in Sindh and Balochistan.