APCMA: Capacity utilization touches 93% in October 2017

Cement consumption continued to surge in October 2017 as the monthly despatches of the commodity reached a record high of 4.222 million tons, which is 19.71 percent higher than 3.526 million tons despatches in October 2016. The total despatches of cement in the country has reached 14.570 million tons in the first four months of 2017-18 that is 16.53 percent higher than the despatches of 12.503 million tons during the corresponding four months of last fiscal. The increase in cement despatches is despite the fact that the exports during the period under review declined by 16.16 percent.

Much of the surge in despatches in October 2017 was due to the high local demand as domestic consumption increased by 25.61 percent from 3.008 million tons in October 2016 to 3.779 million tons last month. However, the trend of decline in exports continued which went down 14.55 percent in October 2017 as compared to same month last year, from 0.518 million tons to 0.443 million tons.

‘Higher cement consumption in the country is a sign of its growing economy that is having positive impact on over three dozen industries connected with construction sector,’ said a spokesman of All Pakistan Cement Manufacturers Association. However, the spokesman said that the exports still remain below par. ‘APCMA has pointed out the reasons for decline in exports that is worrisome as the industry still has idle capacity,’ he said adding that almost all decline in exports is via sea. Exports to India are also affected but not to that extent.

He said the cement demand in the North Zone remained surprisingly very high as the consumption in the region stood at 3.148 million tons during October 2017. He said it was for the first time that North Zone has consumed more than three million tons cement in a month. In October 2016 the domestic cement consumption in the North Zone was 2.489 million tons. He said cement demand in the Southern region of the country also increased from 0.519 million tons in October 2016 to 0.631 million tons in October 2017.

He said due to robust growth in local consumption in the first four months of this fiscal, the industry utilized over 93 percent of its installed capacity. ‘This is the highest capacity utilization by the industry in last 20 years. However, 1.08 million tons capacity still remained idle,’ he said adding that this could have been covered by exports if the government policies are export friendly.

However, he said that higher cement consumption does not mean that the economic planners ignore the genuine difficulties faced by this sector. He said the industry is performing in stiff regulatory environment and is only surviving because it has upgraded its technology that has provided it the strength to take any challenge head on.

‘Our quality is the best in the region and our efficiency is second to none. No cement could compete with Pakistani cement if imported at real and fair value after paying all government levies. However, weak border controls and lax customs vigilance allow entry of cement from across our borders at unfair valuations hurting the local cement industry,’ he added.

The spokesman said that the government should lower excise duty on the sector to further boost demand. Similarly, import duty on coal imported by the sector should be brought at par with other sectors.

Posted in Cement News.