Domestic cement demand falls by 13.73% but is expected to be raised by housing schemes

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News Analysis |

Exports were the saving grace for Pakistan’s cement industry in August as the domestic consumption plummeted by massive 13.73 percent which in fact was the first such decline in consumption in last three years. According to the statistics issued on Wednesday by APCMA, the domestic cement dispatches in Pakistan were 2.895 million tons out of which 2.326 million tons were dispatched by mills located in the northern parts of the country and 0.569 million tons by the South based mills. During the corresponding month of last year, the North zone dispatched 2.730 million tons of cement and South based mills dispatched 0.625 million tons.

Domestic cement dispatches in the first two months of current fiscal declined by 5.31 percent. In the North zone, cement dispatches declined by 8.80 percent while in the south zone it declined by 10.91 percent. However, exports dispatches in the north zone declined by 29.66 percent while in the south zone it grew by 158.40 percent. The abrupt decline in domestic cement uptake has taken the cement manufacturers by surprise.

Pakistan’s Prime Minister, Imran Khan, has chaired a meeting on construction of the ’05 Million Housing programme’ for of low-cost/affordable housing.

Spokesman of All Pakistan Cement Manufacturers’ Association (APCMA) said that the industry was expecting a slower growth as witnessed a month earlier but never expected negative growth. “This might be due to change of governments as the pace of ongoing development projects got affected in the process, as private sector construction of houses seemed to be normal,” he added, expressing hope that this was a one-off decline and the growth would gather pace in coming months.

“The industry is worried because they have made a tremendous investment to increase capacity that has now crossed 50 million tons a year. This expansion was made on the assumption that construction activities would continue to grow at a rapid pace in the long term,” the spokesman added. He said the manufacturers were not worried when the domestic cement dispatches grew by a little over 4 percent in July 2018. He said slower growth was attributed to the hectic election activities that were going on in the country.

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He said that the things should have normalized in August and it was a matter of great concern for the industry that it did not. He said that in July 2018 the overall growth in the industry was 5.1 percent while in August 2018 the overall growth was negative 8 percent. In the first two months of this fiscal, the industry recorded a negative growth of 1.98 percent. He said, “Industry is still hopeful of a rapid turnaround as the new government has promised to construct one million new houses every year. Once this program is energized the growth would accelerate”, he added.

Pakistan’s Prime Minister, Imran Khan, has chaired a meeting on construction of the ’05 Million Housing programme’ for of low-cost/affordable housing. The meeting was attended by Yaqoob Izahar, Najeeb Haroon, Arshad Dad, Secretary Housing & Works Dr. Imran Zeb Khan, Secretary Law M Justice (R) Abdul Shakoor Paracha and other senior officers.

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The Prime Minister said that construction of low-cost and affordable ’05 Million Houses’ was the foremost priority of the government which would not only address housing issues of the people especially in the major cities but would also promote economic growth and would create job opportunities. This is expected to lead to an increase in cement demand.

The committee for the scheme will submit its initial recommendations to the Prime Minister within one week. The Prime Minister emphasized that the private sector should be encouraged and maximum facilitation should be extended to those who would be partnering with the government in the implementation of the 05 Million Housing Programme’.

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