The capacity utilization of the cement industry slid to 68.29 percent during the first two months of FY13, the lowest in one decade as demand for cement drastically decreased in both local and international market.
The decline of cement demand during July and August was mainly due to Ramadan and heavy rains in the country.
According to data released by All Pakistan Cement Manufacturers Association (APCMA), the total cement dispatches that declined by 1.64 percent in July posted a decline of 2.82 percent in August. “The declining consumption of cement is a matter of serious concern for the industry,” said a spokesman of the APCMA.
He said the cement industry invested heavily in enhancing its capacities in last decade basically to cater to the expected increase in local consumption. He said cement capacity increased from 16.321 million tons in 2002-03 to over 44.80 million tons in 2012-13. The local consumption of cement however remained almost stagnant in past five years fluctuating in the range of 22-23 million tons. He said the economic recession kept the construction sector growth very low. However, he said the exports did provide the cement manufacturers a relief at the start of this century when the cement exports jumped from zero in 2001-02 to 10.981 million tons in 2008-09.
The exports have been on decline since then reducing to only 8.568 million tons in 2011-12. The decline he added continues in this fiscal year as the exports during the first two months of this year declined further by 5.87 percent from 1,545,879 tons in July-August 2011 to 1,455,061 tons in July-August 2012. He said Pakistan’s exports of cement to India decreased by a whopping 38 percent during the first two months of FY13 to mere 75,784 tons.
The exports to India in fact have been on constant decline ever since the two countries opened their borders for liberal bilateral trade.
“The decline is not due to lack of cement demand in India but because of very stringent non tariff barriers erected by our neighbor,” he said adding Pakistan’s cement is preferred by the Indians because of better quality.
He said that India has not yet removed the trade barriers it promised to Pakistani planners on numerous occasions. The export of cement to India is allowed through trucks and rail but the industry is unable to export as much as quantity due to trade barriers, labor shortages at Indian side of Wahga border and non availability of Railways wagons.
Other barriers like delay in registration of cement plants for granting export license still exist, he added. He said exports to Afghanistan are also on decline due to slowing down of its economy. The cement exports to Afghanistan he added declined by almost five percent during the first two months.
Cement industry dispatched 5.096 million tons of cement against dispatches of 5.209 million tons during the corresponding months of last fiscal year.
Local consumption declined from 3.664 million tons in July-August 2011-12 to 3.641 million tons in the same months of this fiscal registering a decline of 0.61 percent. Exports declined from 1.546 million tons to 1,455 million tons depicting a decrease of 5.87 percent.
