Cement exports have shown a dismal performance as witnessed by a paltry 0.21 per cent increase in the first quarter of the financial year 2012 as compared to corresponding period last year.
According to the All Pakistan Cement Manufacturers Association (APCMA), exports to different countries via sea route have dropped significantly by 24 per cent as compared to 1QFY11, standing at 0.857 million ton in 1QFY12.
Exports to India increased by 53.8 per cent but the small volume of 0.163 million tonnes only in the 1QFY12 was contrary to expectations of an over 1.0 million tonnes increase owing to improving trade relations between Pakistan and India. According to the statement, the major factor behind limited exports is a sharp increase in input cost as prices of almost all of major inputs like, furnace oil; coal and electricity, etc. have surged during first quarter of this financial year. The transportation cost has also increased exorbitantly due to am increase in diesel prices. In the meantime, there was no progress in cement exports by truck via Wagha Attari border post which if opened, can substantially boost export volume.
Cost of power has increased by nine per cent during the last three months from Rs7.1 per KWH to Rs7.7 per KWH with increasing load-shedding and the situation seems set to become worse with further expected increase of Rs3.04 per KWH in power tariff.
Rates of diesel, coal and furnace oil have also increased by 15, 8 and 28 per cent, respectively, in the first quarter of FY2012 and the impact of this increase for the upcountry plants is much higher as these inputs have to be transported from Karachi.
APCMA said that gas rates have also increased during last three months by over 10 per cent for cement plants and as well as their captive power units. However, local cement sales improved due to a slight increase in local consumption, which witnessed a growth of 12.23 per cent during the first quarter of current fiscal year 2011-12.
The cement manufactures of the northern region have sold 4.23 million tonnes cement, while southern mills sales stood at 0.945 million tonnes in Jul-Sep 2011. During the financial year 2010-11, 10 cement units suffered loss before taxation aggregating to Rs5.27 billion while only seven cement units, of which two are located near Karachi in close proximity to the sea port, earned profit of Rs5.98 billion. At the end of last fiscal, industry debts to financial institution amounted to a staggering amount of over Rs125 billion while the equity is Rs116 billion.