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Pakistan exports falling

World Cement,


January was a month of ups and downs for the Pakistani cement industry, which saw domestic sales increase by 7% month-on-month to 1.907 million t, while exports fell 20% m/m to 0.566 million t.

According to figures provided by the All Pakistan Cement Manufacturers Association, the first seven months of this fiscal have seen both domestic and export sales suffering, with the former down 9.63% and the latter declining by 17.03%

Total sales for the July 2010 – January 2011 period reached just 17.2 million t, down 12.01% y/y. In the July 2009 – January 2010 period, domestic sales had increased 14.7%, contributing to an overall sales growth of 9.3% as exports fell.
Pakistan has a massive installed capacity of over 41 million t, divided unevenly between the north (which has by far the greater part at >30 million t capacity) and south of the country. A further 2.68 million t will be added this fiscal, as Fauji Cement’s new plant becomes operational. Domestic demand in Pakistan is comparatively low, with the majority of capacity intended for export, on which the industry is highly reliant. However, capacity utilisation has been falling since its peak of >90% in 2004/05. In 2009/10 capacity utilisation stood at 76.53% and that figure has decreased to 71.55% in the first seven months of this fiscal.

Companies exporting cement from the land-locked north of the country via sea have suffered the loss of many export orders due to the debilitating transportation charges from their plants to the ports.

At one time, the rate of growth of export sales was phenomenal, registering a 140% increase in 2007/08 and a 39% increase the following fiscal, at which point export sales stood at 10.75 million t. The 2009/10 fiscal saw a small decline to 10.65 million t. Exports in the first seven months of this fiscal have reached 5.19 million t, a 17.03% decline y/y.

The industry is now calling on the government to step in, as profits take a beating. High energy costs for all, in addition to the cost of transporting imported coal to producers in the north of the country, has placed a significant financial burden on producers that has reportedly left many on the verge of collapse. Though the cost of cement production has risen exponentially, it is difficult to pass that price rise on to consumers in such a depressed market. In addition, the plan to increase exports has suffered from the high cost of transportation and the failure to introduce a subsidy that would benefit the industry. The APCMA is asking the government to get rid of excise duties that add Rs.52/bag in taxes and to fix a minimum price on exports to Afghanistan, which are currently priced very low due to the enormous competition between northern producers.

Read the article online at: https://www.worldcement.com/asia-pacific-rim/09022011/pakistan_exports_falling/


 

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