Pakistan: Cement industry capacity utilization touches 99 % in January 2018

Domestic consumption of cement increased by a whopping 37.3 percent in January 2018 on year-on-year basis as the construction activities continued to lead the economy and employment of both skilled and unskilled workforce of the Pakistan. However, the dismal performance of exports remained the achilles’ heels of cement industry as the exports went down by 7.82 percent from 0.376 million tons in January 2017 to 0.347 million tons in January 2018. Capacity utilization for the month of January 2018 was 99.11 percent.

According to the data released by All Pakistan Cement Manufacturers’ Association (APCMA), out of total cement despatches of 4.084 million tons in January the domestic consumption was 3.737 million tons. The capacity utilization of the industry during the first seven months of this fiscal reached 91.28 percent which is the highest since 2004-05. Cement sector is quite hopeful that the present growth momentum in cement sector will continue and absorb the upcoming production capacities of around 15 million tons in next three to four years.

Cement consumption in North zone was 3.018 million tons and surged by 41.68 percent in January 2018 compared to same month last year, which lead the domestic growth. This is the second time this fiscal that cement consumption in Northern zone of the country exceeded 3 million tons.

The consumption in the Southern zone of the country was also robust being 0.719 million tons compared with 0.591 million tons during the corresponding month of last fiscal. During the first seven months of current fiscal cement industry despatched 26.327 million tons while during seven months of last fiscal the total despatches were 22.904 million tons.

The growth in domestic consumption of cement during the first seven months of this fiscal was 20.17 percent, however, overall increase in cement despatches was restricted to 14.94 percent due to 16.25 percent decline in cement exports during the period under consideration.

During the year under review, diesel and coal prices have continuously gone up which increased the cost of production and to add fuel to the fire competition with smuggled and imported cement has resulted in a steep decline in the profit margins of the industry.

Spokesman of APCMA regretted that the government is not heeding to the requests of the industry to take steps for increasing exports and eliminating the unlawful smuggled or under invoiced imports of cement. He said that the industry is managing the import threat through efficient operations and low profit margins. “The government should take measures to increase cement exports and curb the smuggling and under invoicing to provide some much needed relief to the industry,” he added.

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