ISLAMABAD: The cement sector posted an encouraging growth of 22.77 per cent in August 2021, as total cement despatches during the month were 4.336 million tonnes against 3.531 million tonnes during the same month of last fiscal year.
According to data released by the All Pakistan Cement Manufacturers Association (APCMA), local cement despatches during the month of August increased to 3.814 million tonnes from 2.805 million tonnes in August 2020, showing a healthy increase of 35.98 per cent. Exports shipments, however, continued to decline as the volumes reduced from 726,687 tonnes in August 2020 to 521,468 tonnes in August this year, decreasing by 28.24 per cent.
During August this year, the despatches from North-based cement mills were 3.141 million tonnes in domestic markets, showing an increase of 25.42 per cent over 2.504 million tonnes in August 2020. South-based mill despatches were 673,572 tonnes of cement in local markets during August 2021, registering a robust increase of almost 124 per cent compared to the despatches of 300,750 tonnes in August 2020.
Exports from North-based mills showed a decline by 33.14 per cent as the quantities reduced from 212,076 tonnes in August 2020 to 141,804 tonnes in August 2021. Exports from the South also decreased by 26.22 per cent to 379,664 tonnes in August from 514,611 tonnes during the same month last year.
During the first two months of the current fiscal year, total cement despatches (domestic and exports) were 8.235 million tonnes, which is 1.61 per cent lower than 8.37 million tonnes despatched during the corresponding period of last fiscal year.
North-based Mills despatches were 6.033 million tonnes of cement domestically during the first two months of the current fiscal year showing a slight increase of 1.57 per cent than cement despatches of 5.939 million tonnes during July-August 2020.
Exports from the North declined by 17.16 per cent to 277,422 tonnes during July-August 2021 compared with 334,899 tonnes exported during the same period last year.
Domestic despatches by South-based Mills during July-August 2021 were 1.228m tonnes showing a healthy increase of 50.01pc over 818,600 tonnes of cement despatched during the same period of last fiscal year. There was however a massive decline of around 45 per cent in exports from the South zone as the volumes reduced to 696,823 tonnes in the first two months of the current fiscal year from over 1.277 million tonnes during the corresponding period of last fiscal year.
A spokesman of APCMA said that the landed price of coal was around Rs18,000 per ton in August 2018, which had increased multiple times since then and the current landed cost comes to around Rs31,500 per ton, increasing the cost of production by approximately Rs90 per bag.
Similarly, the electricity rate that was Rs11.68 per unit in August 2018 was now Rs19.40 per unit. “This has impacted the cost of production by around Rs35 per bag,” he said, adding that other input costs like packing material, provincial taxes on raw material and fuel prices had also gone up which had increased the overall cost of production.
He further emphasised that the current demand for imported coal for the cement sector was around 8.120 million tonnes but there is only one terminal in the country to handle entire coal shipments. “Due to this, the cement industry is continuously facing delays in the unloading of coal shipments, resultantly paying demurrages and incurring extra costs on its operations,” the spokesperson said.
“The situation will further aggravate within the next two years when the cement production capacity of the country will increase from 70 million tonnes to around 100 million tonnes per annum,” he added. Accordingly, the demand for coal will increase and coupled with the requirement of other sectors like textile and power etc, handling by just one terminal will not be possible.
APCMA urged the government for the availability of multiple berths for coal handling and also ensuring accessibility at KPT for coal handling (subject to cabinet’s approval). “Without increasing the capacity of coal handling, the country will have a major risk of energy security as well as the availability of key industrial materials such as cement, chemicals etc,” the spokesperson said.
“Today the situation is very challenging because of the limited coal handling capacity at PIBTL which is causing huge demurrages and costing the exchequer around $100 million per annum,” he added.
The spokesman of APCMA said that an increase in domestic despatches was a good sign for the cement industry which shows that the economic activity has picked up which will help the country achieve higher GDP growth. However, he added that the government planners should take notice of declining exports and should support the industry to compete in the international markets.
