KARACHI: Overall despatches of the cement sector during first four months of current fiscal year went up by 5.37 per cent to 15.353 million tonnes, according to latest data released by All Pakistan Cement Manufacturers Association (APCMA).
The growth was led primarily led by exports which went up by 39pc followed by a relatively marginal uptick of 0.82pc in local demand.
The sector, divided into north and south regions, has seen its profitability decline due to rising input costs: surge in international coal prices, rupee depreciation and higher fixed costs. According to APCMA spokesperson, manufacturers’ profitability dropped by 42pc during the first quarter.
Northern manufacturers, who usually lead growth, continue to suffer mainly due to unenthusiastic demand in the domestic market and exports. Domestic despatches from the region during the period under review clocked in at 10.244m tonnes witnessing a decline of 4pc from the same period last year. On the other hand, region’s exports also dipped by 21.54pc to 1.010m tonnes during the period.
However, southern manufacturers’ dispatches to the domestic market went up by 24.53pc reaching 2.702m tonnes up from 2.170m tonnes during the same period last year. The positive trend was also seen in the exports from the southern region which went up by a mammoth 216pc during the period clocking in at 1.397m tonnes.
On a monthly basis, exports grew by an impressive 38.87pc, while domestic consumption registered an increase of 3.76pc. October’s total cement despatches grew by 7.45pc reaching 4.536m tonnes of which 3.921m tonnes were consumed domestically and 0.615m tonnes were exported.
APCMA spokesman said that cement industry’s profitability has declined considerably due to increase in input costs while the construction sector is not posting the anticipated demand.
The surge in exports comes after a steep decline in rupee, as dollar increased from around 124 rupees in July to 133 by October-end; a jump of 7.26pc in just four months. On the other hand, rupee depreciation has also pushed up input costs of most of the fuels – imported coal – and spare parts consumed by the industry.
Additionally, the taxes on a 50 kg bag worth Rs600 work out to Rs185 per bag significantly reducing the bottom-line profits of manufacturers. APCMA spokesperson urged the government to cut down duties and taxes on the sector in order to improve local demand and help manufacturers explore foreign markets to earn precious foreign exchange and contribute more to the national economy.
Published in Dawn, November 8th, 2018