Cement sector posted growth of 22.77 percent in August 2021. Total Cement despatches during August 2021 were 4.336 million tons against 3.531 Million Tons despatched during the same month of last fiscal year.
According to the data released by All Pakistan Cement Manufacturers Association (APCMA), local cement despatches during the month of August 2021 increased to 3.814 million tons from 2.805 million tons in August 2020, showing a healthy increase of 35.98 percent. Exports despatches however continued to decline as the volumes reduced from 726,687 tons in August 2020 to 521,468 tons in August 2021, decreasing by 28.24 percent.
During August 2021, the North based cement mills despatched 3.141 million tons cement in domestic markets showing an increase of 25.42 percent over 2.504 million tons despatches in August 2020. South based mills despatched 673,572 tons cement in local markets during August 2020 registering a robust increase of almost 124% compared to the despatches of 300,750 tons in August 2020.
Exports from North based mills showed decline by 33.14% as the quantities reduced from 212,076 tons in August 2020 to 141,804 tons in August 2021. Exports from South also decreased by 26.22 percent to 379,664 tons in August from 514,611 tons during the same month last year.
During the first two months of current fiscal year, total cement despatches (domestic and exports) were 8.235 million tons that is 1.61 percent lower than 8.37 million tons despatched during the corresponding period of last fiscal year.
North based Mills despatched 6.033 million tons cement domestically during the first two months of current fiscal year showing a slight increase of 1.57 percent than cement despatches of 5.939 million tons during July-August 2020. Exports from North declined by 17.16% to 277,422 tons during July-August 2021 compared with 334,899 tons exported during the same period last year.
Domestic despatches by South based Mills during July-August 2021 were 1.228 million tons showing healthy increase of 50.01 percent over 818,600 tons cement despatched during the same period of last fiscal year. There was however massive decline of around 45 percent in exports from south zone as the volumes reduced to 696,823 tons in the first two months of current fiscal year from over 1.277 million tons during corresponding period of last fiscal year.
A spokesman of APCMA said that the landed price of coal that was around Rs. 18,000 per ton in August 2018 has increased multiple times since then and current landed cost comes to around Rs. 31,500 per ton increasing the cost of production by approx. Rs. 90 per bag. Similarly electricity rate that was Rs. 11.68 per unit in August 2018 is now Rs. 19.40 per unit. This has impacted the cost of production by around Rs. 35 per bag. Other input costs like packing material, provincial taxes on raw material and fuel prices have also gone up which has increased the overall cost of production.
He further emphasized that the current demand of imported coal for cement sector is around 8.120 million tons but there is only one terminal in the country to handle entire coal shipments. Due to this, cement industry is continuously facing delays in unloading of coal shipments, resultantly paying demurrages and incurring extra costs on its operations. The situation will further aggravate within next two years when cement production capacity of the country will increase from 70 million tons to around 100 million tons per annum. Accordingly, the demand of coal will increase and coupled with the requirement of other sectors like textile and power etc, handling by just one terminal will not be possible. APCMA urges the government for availability of multiple berths for coal handling and also ensuring accessibility at KPT for coal handling (subject to cabinet’s approval). Without increasing the capacity of coal handling, the country will have major risk of energy security as well as availability of key industrial materials such as cement, chemicals etc.
Today the situation is very challenging because of limited coal handling capacity at PIBTL which is causing huge demurrages and costing exchequer around 100 million USD per annum.
The spokesman of APCMA added that increase in domestic despatches is a good sign for the cement industry which shows that the economic activity has picked up which will help us to achieve higher GDP growth. However, he added that the government planners should take notice of declining exports and should support industry to compete in the international markets.