Cement dispatches remains flat in January 2017

Cement sector has posted a nominal increase of 0.78 percent in local cement dispatches while export dispatches declined by 2.71 percent in January 2017 compared to this with same month last year.  Due to heavy rains and snowfall across the country during the month of January 2017, domestic cement dispatches remains low which affects the capacity utilization as well.

However, according to data released by the All Pakistan Cement Manufacturers Association, during the first seven months of current fiscal year, the cement industry has posted a growth of 9.52 percent in local dispatches compared with local dispatches during same period of last fiscal year. Export dispatches recorded a negative growth of 3.44 percent compared with exports dispatches during the same period of last year. The overall situation during first seven months of current fiscal year showed a 7.45 percent growth compared to the same period of last fiscal year. Capacity utilization for seven months of current fiscal was 85 percent.

Spokesman for APCMA said that domestic dispatches in January 2017 were 2.722 million tons registering a growth of 0.78 percent while the exports amounted to 0.376 million tons reflecting negative growth of 2.71 percent, compared to January 2016. Total cement dispatches in January 2017 amounted to 3.087 million tons depicting a growth of 0.34 percent. During the month of January 2017, exports to Afghanistan decreased from 0.174 million tons in January 2016 to 0.166 million tons showing a decline of 4.5 percent. However, exports to India registered a healthy increase from 0.049 million tons in January last year to 0.861 million tons during the same month this year, showing growth of 77 percent. Exports to India are mainly through Wahga border and southern coast of India.

Spokesman for APCMA expressed concerns over falling exports to Afghanistan that have declined in the first seven months of this fiscal by 10.88 percent. They said cement exports to India have registered an increase of 79.34 percent during July 2016 to January 2017. Export by sea also declined by 19.23 percent during first seven months of current fiscal.

The factors contributing to decline in exports include increase in fuel prices and other input cost, and the most damaging was the barriers erected by the countries we export to, such as anti-dumping duty imposed by South Africa to protect its local industry. Moreover, in India in order to discourage imports, the tariff is around 19 percent including 3 percent education cess to promote education in the country, which makes it difficult to compete with their local manufacturers and other exporting countries which have lesser input cost.

Spokesman of APCMA said that cement industry in order to meet the massive demand taking place in the country due to various Government and CPEC projects has gone in for an expansion in its capacity by 26.250 million tons per annum. ‘It will be illogical advice for government to allow import of cement or abolish import duty. On one hand it will deprive government from revenue earned through import duty and on the other hand it will devastate the whole industry expansion plan,’ he added.

The cement industry is among the highest contributors to the national exchequer over the last few years. The contribution has more than doubled from 39 billion rupees in 2012-13 to 83 billion rupees in 2015-16. In last fiscal budget, Government increased Federal Excise Duty on cement from Rs. 400 per ton to Rs. 1,000 per ton along with general sales tax of 17 percent. Industry paid Rs. 2,492 per ton to the national kitty till June 2016. For the year 2016-2017 the government revenue in shape of duties and taxes will increase further from Rs. 2,492 per ton to around Rs. 3,400 per ton i.e. Rs. 170 per bag.

Spokesman of APCMA once again urged the government to take effective steps in order to stop penetration of Iranian cement in Pakistani markets on the strength of massive under invoicing and / or misdeclaration. A proper vigilance and accountability system needs to be put in place to stop cement smuggling into the country. Government should also increase Regulatory Duty for import of cement in addition to custom duty in order to protect the local industry.

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