Karachi, April 04: Cement sector, sitting on huge unutilized capacities, continued to suffer from lack of domestic demand due to slowing down in growth, lower development spending and delay in launch of government’s ambitious low cost housing scheme.
Cement consumption is usually at its peak in the month of March as construction activities peak due to pleasant weather and urgency in completing government’s development works within the financial year, however, total despatches in March 2019 declined by 6.7 percent to 4.340 million tons from 4.652 million tons in March 2018.
The trend of decline in domestic consumption continued as it went down to 3.858 million tons in March 2019 from 4.260 million tons in March 2018, depicting a decrease of 9.44 percent. Though exports continued to increase, the growth posted in March 2019 (23.08 percent) is the lowest export growth in last six months.
The domestic consumption in Northern part of the country continued to decline as it was only 3.071 million tons last month against 3.543 million tons same month last year. Exports from the mills based in the Northern region also declined to 0.131 million tons in March 2019 from 0.218 million tons last year in March 2018. Domestic despatches from mills in the Southern part of the country stood at 0.787 million tons in March 2019 as compared to 0.717 million tons in March 2018. Exports from the region also increased from 0.173 million tons in March 2018 to 0.350 million tons in March 2019.
The decline in March was in line with the trend in current fiscal as total local despatches in first 9 months of this fiscal stood at 29.448 million tons in March 2019 as compared to 31.314 million tons in same period last year whereas export rose to 5.132 million tons in July 2018-March 2019 as compared to 3.444 million tons same period last year.
The most worrying aspect for the cement industry is the continued slump in the Northern region of the country where local dispatches have declined by over 10 percent in last nine months from 25.887 million tons in 2017-18 to 23.199 million tons in the corresponding period of last fiscal. On the other hand, local despatches from the mills situated in Southern region of the country have increased in first nine months of the fiscal by 15.16 percent to 6.248 million tons from 5.426 million tons in July 2017-Mar 2018. Exports have also increased from the South based mills by 210 percent in last nine months, from 1.013 million tons in July 2017-March 2018 to 3.143 million tons in last nine months, while in the North the exports stood at 1.988 million tons in first nine months of this fiscal as compared to 2.431 million tons during same period last year, a decline of 18.19 percent.
“The cement industry has been under pressure this fiscal as development expenditure has been slashed by 40 percent from last year, however, we were pinning hopes on announcement of program to build 5 million low cost houses in next 5 years for the homeless but that project is yet to start,” said the spokesman of All Pakistan Cement Manufacturers’ Association (APCMA) adding that government should start the project as soon as possible as this is the only chance to gear up production for the industry in current scenario.
“The industry will face shortage of transport both for domestic and export dispatches due to the law on axle load restriction. He appealed the government to relax the axle load limitations and give a viable deadline to the transporters to add more fleet.