Exports are proving to be Achilles’s heel for the cement sector that has seen its growth inhibited by the regular decline in exports despite a very healthy growth in domestic cement consumption. Exports require government’s support to realise the actual potential of the cement sector.
The cement industry despatched a record 33.88 million tonnes of cement during the first ten months of this fiscal. The domestic consumption was 29.871 million tonnes while the exports were only 4.01 million tonnes. During the same period of last year, the volume of cement dispatched was 31.901 million tonnes, out of which the domestic consumption was 26.973 million tonnes, and exports were 4.928 million tonnes. During the July-April 2017 period, the domestic consumption of cement surged by 10.74 percent, while the exports declined by 18.63 percent. Because of this massive decline in exports, the growth in cement dispatches increased by only 6.21 percent.
Meanwhile, data released by APCMA shows that in the month of April the cement units dispatched 3.576 million tonnes, out of which 2.734 million tonnes cement was dispatched to the Northern part of the country and 0.586 million tonnes was dispatched to the Southern part of the country. During the month of April 2017, capacity utilisation of the industry remained 92 percent. During April 2017, the domestic consumption of cement surged by 9.53 percent, while the exports declined by 50.75 percent.
There is more than a 50 percent decline in exports during the month of April. The exports from mills base in the north were 181911 tonnes and from mills based in the south was 0.074 million tonnes only. Total export of cement to Afghanistan in the month of April 2017 was 0.045 million tonnes, whereas export to India and other countries was 0.131 and 0.081 million tonnes respectively.
The spokesman of All Pakistan Cement Manufacturers Association said that buoyancy in the domestic market is a good omen for the cement industry. However, he said, it is not prudent to ignore the sharp decline in exports. He said exports at one time peaked at above 10 million tonnes, which has progressively declined to almost half.
He said the industry is operating on excess capacity and is regularly adding new units to keep abreast with the expected increase in construction activities. Naturally, he added, the cement manufacturers are more interested in catering to the domestic market but they have to dispose of excess capacities through exports. If exports continued to decline, new capacity additions in the sector would stop.
He said the planners have been informed about the impediments in exports and if proper steps are taken in this regard, the revival of exports would be easier which are a cushion for the sector in rainy days.
Spokesman of APCMA said that clinker and cement are being manufactured locally and both 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 11pc and 21pc of customs duty and due to cheap energy cost in neighbouring countries; low-grade quality cement is being dumped into Pakistan’s market.
It is urged to increase the customs duty on import of clinker from 10pc to 20pc in order to support the local manufacturers and the imports of cement should not be allowed until all the exporter have registered themselves with Pakistan Standards and Quality Control Authority (PSQCA) and PSQCA certifies the quality of cement, as is the practice and norm in India as well as all other importing countries.
