In spite of cement consumption having rebounded in the domestic market in February; the industry registered a negative growth for the first time this fiscal due to the massive decline of 45 per cent in exports.
Total cement consumption in February 2017 was 3.435 million tonnes, which is 0.41 per cent less than the consumption of 3.449 million tonnes during the corresponding month of last year. The domestic cement consumption in February was 3.181 million tonnes out of which 2.580 million tonnes was dispatched by the North based cement mills and 0.601 million tonnes was dispatched by cement mills, located in the Southern part of the country. The increase in domestic consumption was 6.69 per cent. Exports in February stood at 0.254 million tonnes, that is 45.69 per cent less than exports achieved in February 2016.
In the first eight months of this fiscal, the country dispatched 26.339 million tonne cement, showing an overall growth of 6.36 per cent over the corresponding period of last fiscal. During this period, the domestic consumption increased by 9.12 per cent, but exports declined by 8.54 per cent. It is worth noting that the cement consumption during the July-February period of this fiscal increased by 8.26 per cent in the North, and by 13.15 per cent in the southern part of the country. In contrast, the exports from North declined by only 2.98 per cent compared to a decline of 18.21 per cent in the South. This should be a matter of concern for the authorities because in the past, the South based mills being nearer to the sea, were the leading cement exporters.
Spokesman of APCMA said that clinker and cement are being manufactured locally and are abundantly available in Pakistan. It is surprising to note that the list of locally manufactured goods as notified by the Federal Board of Revenue vide Custom General Order no. 11 of 2007 dated August 28, 2007, does not include cement. Secondly, the import of clinker and cement is liable to 10pc and 20pc of customs duty. Also, due to cheap energy costs in the neighbouring countries; low-grade quality cement is being dumped in the Pakistani market.
It is urged to increase the customs duty on import of clinker and cement from 10pc and 20pc to 35pc. In order to support the local manufacturers, import of cement should not be allowed until the exporters have registered themselves with the Pakistan Standards and Quality Control Authority (PSQCA), along with its certification of quality cement, just as being done by India and all other importing countries’ authorities.
Pakistan has already lost a major chunk of its market in Afghanistan to Iranian cement. The high energy cost has made the cement more expensive, as cement is an energy-intensive sector. The cost of electricity and gas in Pakistan is the highest in the region, while additional duties on coal imports have nullified the lower cost of coal in the global markets. On the domestic front, high government levies have encouraged some unscrupulous elements to smuggle or import under invoiced Iranian cement.
Spokesman of APCMA once again urged the government to take effective steps in order to stop the penetration of Iranian cement in Pakistani markets on the strength of massive under-invoicing and/or misdeclaration. A proper vigilance and accountability system needs to be put in place to stop cement smuggling into the country. The government should also increase import duty for import of clinker and cement in order to protect the local industry.
