Cement makers are having a roaring business even after the increase in price of the commodity and are making easy money due to increased domestic demand.
Cement despatches to domestic markets during the month of June 2016 increased by 9.2 per cent to 2.96 million tonnes compared to 2.71 million tonnes during the same month last year.
The comparatively lower growth in June 2016 is mainly due to the holy month of Ramzan. Cement exports during June 2016 remained 387,060 tonnes against the 552,867 tonnes in June 2015, showing a massive decline of 30 per cent. Total despatches during June 2016 were 3.35 million tonnes compared to 3.26 million tonnes during the same month last year, showing a marginal increase of 2.57 per cent, mainly due to a substantial downfall in exports.
According to the data released by All-Pakistan Cement Manufacturers’ Association, during the fiscal year 2015-16, cement industry despatched 33 million tonnes in local markets, posting a robust growth of 17.01 per cent compared to local despatches during the same period of last fiscal year that were 28.2 million tonnes.
Exports from the country massively declined by 18.38 per cent to 5.87 million tonnes compared to exports during the last fiscal year that were 7.2 million tonnes. Exports to India increased by 42.53 per cent to 992,631 tonnes during the fiscal year 2015-16 against 696,417 tonnes during the last fiscal year. However, the decline in exports to Afghanistan by 15.1 per cent and via sea to other countries by 32.68 per cent affected the overall exports of the country.
Unstable situation in Afghanistan and influx of Iranian cement limited exports to 2.44 million tonnes during the fiscal year 2015-16 compared to 2.87 million tonnes during the last financial year. Likewise, increased competition on global level coupled with economic slowdown in countries where Pakistan has been exporting reduced the country’s exports by sea to 2.44 million tonnes during the fiscal year 2015-16 compared to 3.62 million tonnes during the last fiscal year.
Cement sector closed the financial year 2015-16 on a positive note. The only sour point was the additional tax imposed in the budget 2016-17 that increased the cement price by Rs 35 per bag.
Industry circles fear that additional excise duty imposed in the federal budget 2016-17 might dampen construction activities. They said there was no need to increase the tax as cement was already the most heavily taxed commodity in Pakistan.
They apprehended that Iranian cement might make further inroads in Pakistani markets in view of lax border checks on smuggling and highly liberal attitude of authorities on under invoicing. Cement industry lost approximately one million tonnes of volume due to smuggled Iranian cement coming into Balochistan and other coastal areas. This trend is going up despite several letters and newspaper coverage on the matter but no positive step to curb the smuggling issue has been taken by the government.
A spokesman of APCMA said that a sharp decline in cement exports should be an eye opener for the policy makers of the country. APCMA spokesperson appealed to the government to support local manufacturers in winning back their markets by giving freight/transportation subsidy enabling them to compete at the global level.