Cement industry still not able to utilize idle capacity

Karachi: Cement industry has been experiencing mixed fortunes and still faces dilemma how to utilize its idle capacity as it grapples with high domestic costs and erratic domestic and export markets.

“We are in a fix as the healthy increase in exports in February and March was accompanied with only marginal growth in domestic cement dispatches,” said a spokesman of All Pakistan Cement Manufacturers Association. He said the month of March 2013 is remarkable as the industry dispatched ever highest quantum in its history. He said the industry dispatched 3.326 million tons of cement in March 2013 out of which 2.558 million tons was consumed locally and 0.768 million tons exported. He said exports registered an increase of 22.90 percent when compared with exports made in March 2012. He said exports registered over 15 percent increase in February 2013 as well.

He expressed concern that the domestic market had remained stagnant during last two months. It registered a nominal growth of 1.58 percent in February 2013 and hardly moved up by 0.17 percent in March 2013. He said stagnant economy and increase in input costs has damaged the potential market of cement. The input cost of almost every industry has increased manifold during the last few years, taking heavy toll on the businesses that are already hit by volatile security situation in the country.

During the first nine months of this fiscal the total cement despatches reached 24.542 million tons. The domestic use stood at 18.373 million tons and exported quantity was 6.169 million tons. The overall increase in domestic cement consumption was 6.05 percent while the overall decline in exports was 1.19 percent. The total increase in the despatches of cement stood at 4.13 percent after adjusting for decline in exports.

He said incessant increase in the input cost is creating difficulties for the industry. He regretted that no facilitations are forthcoming from the government to boost cement consumption. He said on the input side the price of furnace oil, the main energy fuel of cement has gone up from Rs. 33,910 per ton in 200809 to Rs. 66,065 per ton now. He said natural gas is now virtually unavailable for the cement industry.

Electricity too has witnessed massive price increase in the same period from Rs. 5.6 per KWh in 200809 to Rs 9.45 per KWh in the current financial year. He said that price of diesel, another important fuel used by the industry, has also gone up considerably in last 10 years. The price of a liter diesel was Rs. 60.6 in 200809 which is Rs. 109.21 per liter today, creating difficulties for the sector in terms of both increased fuel and transportation cost.

He urged the caretakers to come up with a prudent policy to boost construction sector so that 56 industries attached with this sector including cement, revive.

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