Pakistan’s cement sector posted a robust growth of 22.77 percent in August 2021 compared to August 2020.
According to data released by the All Pakistan Cement Manufacturers Association (APCMA), the total cement sales during August 2021 reached 4.336 million tons compared to 3.531 million tons during the same month of the last fiscal year.
The local cement sales during August 2021 increased to 3.814 million tons from 2.805 million tons in August 2020, showing a healthy increase of 35.98 percent.
Exports, however, continued to decline as the volumes fell from 726,687 tons in August 2020 to 521,468 tons in August 2021, decreasing by 28.24 percent.
During August 2021, the north-based cement mills sold 3.141 million tons to domestic markets, registering an increase of 25.42 percent over 2.504 million tons in August 2020.
South-based mills sold 673,572 tons of cement to local markets during August 2021, registering a robust increase of almost 124 percent compared to the sales of 300,750 tons in August 2020.
Exports from north-based mills declined 33.14 percent as shipments dropped from 212,076 tons in August 2020 to 141,804 tons in August 2021. Exports from the south were decreased by 26.22 percent to 379,664 tons in August 2021 from 514,611 tons in the same month of last year.
During the first two months of the current fiscal year, total cement dispatches (domestic and overseas) were down by 1.61 percent compared to 8.37 million tons dispatched during the corresponding period of the last fiscal year.
North-based mills sold 6.033 million tons of cement in domestic markets during the first two months of the current fiscal year, showing a slight increase of 1.57 percent than the dispatches of 5.939 million tons during July-August 2020.
Exports from the north declined by 17.16 percent to 277,422 tons during July-August 2021 compared to 334,899 tons exported during the same period of last year.
Domestic dispatches by south-based mills during July-August 2021 were 1.228 million tons, showing a healthy increase of 50.01 percent against 818,600 tons dispatched during the same period of last fiscal year.
There was, however, a massive decline of around 45 percent in exports from the south zone as the volumes reduced to 696,823 tons in the first two months of the current fiscal year from over 1.277 million tons during the corresponding period of last fiscal year.
A spokesman of APCMA said that the landed price of coal, a major input for the cement mills, cost around Rs. 18,000 per ton in August 2018 has increased multiple times since then, and the current landed cost comes to around Rs. 31,500 per ton, increasing the cost of production by approximately Rs. 90 per bag.
Similarly, the electricity rate, which was Rs. 11.68 per unit in August 2018, is now Rs. 19.40 per unit. This has impacted the cost of production by around Rs. 35 per bag. Other input costs like packing material, provincial taxes on raw material, and fuel prices have also gone up, which has increased the overall cost of production, he added.
He further emphasized that the current demand for imported coal from the cement sector is around 8.120 million tons, but there is only one terminal in the country to handle all coal shipments.
Due to this, the cement industry is continuously facing delays in unloading coal shipments, resultantly paying demurrages, and incurring extra costs on its operations.
The situation will further aggravate in the next two years when the cement production capacity of the country will increase from 70 million tons to around 100 million tons per annum. However, he added that government should take notice of declining exports and should support the industry to compete in international markets.
The spokesman added that the increase in domestic dispatches is a good sign for the cement industry, which shows that economic activity has picked up, which will help achieve higher GDP growth.