ISLAMABAD: The cement industry closed the fiscal year 2016-17 on a sour note as the domestic demand declined steeply in June by 19.62 per cent that was almost double than the decline of 10.95 per cent in exports.
According to a spokesman from the industry, the decline in domestic demand was beyond the usual reduction in construction activities during Ramadan that fell in June. He said the industry has been warning the planners to reduce excise duty and import duty on coal and maintain checks on the import of under-invoiced cement from Iran.
He regretted that instead of reducing duties the government has slapped additional tax on the cement industry in the 2017-18 budget. He said this would further reduce domestic consumption, and the revenue would decline despite the fact that the government expects revenue generation from the new tax. He said the huge decline in domestic demand in June was shocking for the industry that fears further withering of demand as a result of new taxation.
During the year 2016-2017, domestic cement despatches by north zone mills were 29.141 million tonnes and export despatches were 3.150 million tonnes, depicting a growth of 7.72 per cent and negative growth of 18.22 per cent, respectively. Domestic cement despatches by south zone mills were 6.511 million tonnes and export despatches were 1.514 million tonnes, showing a growth of 9.47 per cent and negative growth of 25.10 per cent, respectively. The overall growth in cement dispatches during the year 2016-2017 was merely 3.71 per cent. The capacity utilisation for the year 2016-2017 was 86.90 per cent.
Meanwhile, the statistics released by the All Pakistan Cement Manufacturers Association (APCMA) revealed that the industry despatched 2.727 million tonnes of cement in June ’17 against the despatches of 3.351 million tonnes in June ’16.
For the first time in 11 months, cement despatches declined below 3 million tonnes. The steep decline in domestic demand eroded the excellent growth that the cement sector registered in the past 11 months. It was on the strength of that demand in the domestic market that the industry was able to despatch record 40.315 million tonnes of cement during the fiscal year 2016-17. This was 3.71 per cent higher than 38.873 million tonnes cement dispatched during year 2015-16.
Industry experts showed concern because the entire industry is depending on domestic uptake of cement, as the exports have been on constant decline for the last two years. They urged the government to withdraw the tax imposed on cement this year besides withdrawing duty on import of coal to ensure sustained growth of the sector. They said the new taxes imposed on construction related materials, including cement, would result in negative growth of the construction sector.
