Cement despatches to domestic markets during the month of August 2014 were 1.95 million tons compared with 1.57 million tons during same month last year showing an increase of 23.65 percent. Exports during August 2014 were 828,000 tons against 677,000 tons during August 2013 showing rise of 22.25 percent.
Total despatches during August 2014 were 2.778 million tons compared to 2.254 million tons during same month last year showing increase of 23.22 percent. Cement sector posted healthy growth in August 2014 both in exports and domestic consumption despite political turmoil in the country.
A spokesman of All Pakistan Cement Manufacturers Association (APCMA) said here on Friday that mills located in both northern and southern parts of the country registered growth. He said domestic dispatches in north increased from 1.316 million tons in August 2013 to 1.650 million tons in August 2014. Similarly he added exports from this region increased from 437,917 tons last August to 502,845 tons in August 2014.
He said that domestic consumption of cement in south was 261,938 tons in August 2013 that has increased to 300,271 tons in the corresponding month of this year. He said exports from south grew more robustly from 239,126 tons to 324,861 tons this August. He added that the most impressive feature of growth in August 2014 was the momentum in exports after a very long time.
He added that in the first two months of this fiscal year the local consumption stood at 3.681 million tons which was 7.35 percent higher than last year volume of 3.429 million tons. He further said that domestic consumption was negative in July 2014 but the increase in consumption in August 2014 not only compensated the decline but resulted in higher overall consumption.
He said exports suffered a decline of 32 percent in July 2014 and even after increase of over 22 percent in exports during August 2014 the overall exports in the first two months of this fiscal year declined by 6.72 percent to 1.331 million tons from 1,426 million tons during same period of last fiscal year.
The spokesman pointed out that the issues impacting cement sector have still not been addressed by the government. In federal budget 2013-14, cement was brought within the purview of '3rd Schedule' of Sales Tax Act 1990 that increased the overall tax burden and resulted in increase in the local prices.
Representatives of cement industry had detailed meetings with Chairman FBR explaining the cement dynamics with the request to remove cement from 3rd Schedule. Chairman FBR however categorically refused to remove cement from 3rd Schedule but said that they will surely help out the industry by making two zones - north zone and south zone in the country allowing separate MRPs for each zone. Unfortunately this decision has not been implemented till date and no SRO has been issued in this regard. This is a very serious issue impacting growth of cement industry and resulting in high prices to the end user ultimately increasing the construction cost.
Recent federal budget 2014-15 has further added to the worries of cement industry as government has imposed one percent duty on imported coal. The APCMA spokesman stressed that coal is the only fuel on which import duty has been imposed in the recent budget which is direct injustice to the cement industry as cement industry is the main user of imported coal and consumes almost 95 percent of the 4.5 million tons annual imports.
Due to unavailability of gas, other industries have switched to coal and many others are also converting to coal, so this customs duty is to nullify the positive initiative of the government to use coal as an alternate energy source.
The APCMA spokesperson further pointed out that cement industry has spent millions of dollars in converting its plants from the expensive furnace oil to coal in order to reduce the cost of production. Our product will become uncompetitive in the global markets and as a result, the precious 500 million dollars foreign exchange being earned on cement exports will be at risk.
He further added that the cement sector of the country is already facing grave issues including massive loadshedding, shortage of labour, slowdown of construction activities, less exports etc; therefore, this duty is just to add to the woes of the sector. Budget 2014-15 has also increased the excise duty on cement and the impact is around Rs 2.5 per bag, said the spokesman.
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