With cement industries operating at 68.86% of its installed capacity industry circles are worried by the stagnant domestic demand during the first three months of this fiscal and continuously declining exports which is hurting the viability of the industry.
A spokesman of All Pakistan Cement Manufacturers Association said during the first quarter of this fiscal the industry despatched only 7,707,399 tons of cement which was nominally higher than the total cement despatches of 7,496,470 tons during corresponding quarter of last year.
He said the local demand increased during the quarter by 5.30 percent but the decline in exports by 2.68 percent reduced the overall gain in despatches to 2.81 percent.
He said in September the mills in north despatched 1,499,246 tons of cement for domestic market and exported only 633,867 tons of the commodity.
He said the South based mills despatched 294,041 tons of cement for domestic and exported only 184,182 tons of cement.
The spokesman said the total production capacity of cement industry has increased to 44.768 million tons.
He said low capacity utilization is particularly more painful for those units that enhanced their capacities in recent years.
He said debt servicing has now become a major component of cost as even after three interest rates cuts in past six months the effective bank markup for the industry is still well above 12 percent. He appealed the planners to provide some industry specific interest rebate to the industry to keep it afloat.
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 government failure to push India for removal of trade barriers has denied Pakistan a lucrative market that exists across the border.
