Pakistan cement industry earns US$222.84m at Financial Year End

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News Analysis |

Pakistan cement industry observed a positive growth of 0.9 per cent and a contraction of -6.3 per cent in terms of quantity and value in dollars respectively between July and June 2018, according to  official government data.

Justice Nisar said the underground water-level has dropped considerably in the country. The cement factories in Chakwal used water worth billions of rupees without any payment, he remarked.

According to the Federal Bureau of Statistics, Pakistan’s cement industry exported 4.559Mt of cement and earned foreign exchange revenue of US$222.84m during FY18 compared to 4.519Mt of cement at US$237.82m during the last FY17. This shows a growth of 0.9 per cent in quantity, but value in dollars decreased by 6.3 per cent YoY.

However, the Pakistani rupee value of cement fell by 1.91 per cent in this period, despite devaluation of local currency in recent months.

Read more: Pakistan Cement Industry set to boost capacity with new projects

On a monthly basis the Pakistan cement industry exported 369,506t of cement at US$16.318m in June 2018 against 446,741t of cement at US$20.78m in previous month. This translates a decline of 17.3 per cent and 21.5 per cent in terms of value and quantity respectively on MoM basis.

However, when the figure of June 2017 is considered – exports of 353,267t at US$18.01m – the quantity increases by 4.6 per cent but value in dollars fell by 9.44 per cent, respectively on YoY basis.

According to the All Pakistan Cement Manufacturers Association (APCMA), exports to Afghanistan during this period, recorded a growth of 6.1 per cent to 1.82Mt, but India showed a fall of 3.2 per cent to 1.212Mt. The rest of the world also witnessed a fall of over 1.1 per cent to 1.75Mt.

While reviewing export competition in its special report on the cement industry, the Central Bank of Pakistan stated that with the influx of cheap Iranian cement in Afghanistan and the imposition of anti-dumping duties on Pakistani cements in South Africa (the two main export destinations), exports may remain a challenge. To achieve a worthwhile share in the export market, Pakistani cement manufacturers will have to be able to compete effectively with Iranian and Chinese cement producers through improvement in cost efficiencies, the bank urged.

According to the Federal Bureau of Statistics, Pakistan’s cement industry exported 4.559Mt of cement and earned foreign exchange revenue of US$222.84m during FY18 compared to 4.519Mt of cement at US$237.82m during the last FY17.

With the current expansion plans, the industry might be able to exploit economies of scale and gain competitive advantage. However, it will need to explore new markets to sell this higher output and increase export earnings following capacity expansion programmes.

Read more: Cement Sector posts growth, exports on the rise

Meanwhile, Lucky Cement’s profit has fallen as its cost of sales including coal, other fuels and packing materials have risen. Its standalone profit after tax fell by 10.9% year-on-year to US$98.3m in the financial year that ended on 30 June 2018 from US$110m in the same period in 2017. Its gross sales rose by 9.4% to US$543m from US$497m. Cement and clinker sales volumes rose by 9.3% to 7.82Mt from 7.15Mt with increases in both local and export sales.

Also, the chief justice has said that water shortage has emerged as one of the serious issues in the country during the past few years. He gave these remarks on Wednesday during the hearing of a suomotu case based on media reports that Katas Raj temple pond was drying out due to the high consumption of water by the nearby cement factories. Justice Nisar said the underground water-level has dropped considerably in the country. The cement factories in Chakwal used water worth billions of rupees without any payment, he remarked.

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