Cement industry despatched 31.901 million tons of cement during July 2015 to April 2016 period which is 9.71 percent higher than the corresponding period of last fiscal year. The growth in cement consumption has been led solely by domestic markets. Statistics showed that the overall domestic despatches in north based mills increased by 16.02 percent to 22.167 million tons and in south based mills by 23.56 percent to 4.806 million tons. In total, the domestic demand increased by 17.29 percent during the ten months of current fiscal year.
Quantitatively, total domestic despatches were 26.97 million tons from July 2015 to April 2016 compared to 23 million tons during same period of last fiscal year while exports dropped by 18.98 percent to 4.92 million tons during the first ten months of current fiscal against 6.08 million tons during same period of last fiscal year. Cement despatched to domestic markets during the month of April 2016 increased by 14.2 percent to 3.03 million tons compared with 2.65 million tons during same month last year.
Exports during April 2016 were 520,500 tons against 640,000 tons during April 2015, showing decline of 18.66 percent. Total despatches during April 2016 were 3.55 million tons compared to 3.29 million tons during same month last year showing increase of 7.81 percent. A major factor that limited the growth in domestic demand is the ongoing harvesting season. Zone wise figures showed that the domestic despatches by mills located in North were 2.488 million tons compared with despatches of 2.19 million tons during same month last fiscal depicting a growth of 13.21 percent. In South the domestic despatches were 543,119 tons compared with despatches of 456,616 tons in April 2015 depicting a growth of 18.94 percent.
The domestic growth in the country is led by private sector as well as government's spending in infrastructure projects which have helped the demand to grow. The export performance has been negative due to slowdown in countries where Pakistan has been exporting because of lower prices of commodities.
APCMA spokesman has clarified in the media against the baseless allegations levelled by ABAD. "They are trying to hurt the credibility of cement manufacturers. They are also releasing material in the media which is incorrect and the statistics in different areas are baseless. Cement industry is one of the most regulated industry in Pakistan by the regulators. Most of the companies are listed on Pakistan Stock Exchange and appoint services of top five chartered accountancy firms in Pakistan for the statuary audit requirements," APCMA official mentioned.
He said average price of a cement bag of Rs 475 contains government levies worth approximately Rs 135. Moreover, he added, the corporate tax of 32 percent in Pakistan is the highest in the region. In addition to this, 5 percent Workers Profit Participation Fund (WPPF) and 2 percent Workers Welfare Fund (WWF), which are unheard of in the corporate sector makes the total tax incidence of around 39 percent.
Regarding regional comparison of cement prices the spokesman added that there is no possible comparison of Pakistan with China. Iran has electricity rates as low as 2 cents per unit against 10 cents per unit in Pakistan. Likewise in Iran, the furnace oil costs $50 a ton whereas in Pakistan, furnace oil is priced at $280 a ton. Since energy is the major part in overall cement cost, the price per bag cannot be compared fairly between Pakistan and Iran. The spokesman further mentioned that in India, the wholesale prices of cement are around $5.13 per bag contrary to ABAD's claim of Rs 292 (ie $2.79) per bag.
He said it's only a matter of common sense that if, as mentioned in ABAD statement, cement was cheaper in the region than Pakistan, the Pakistani companies could not have been able to export their products in the region and other global destinations.
Our exports to India have shown 25 percent growth during the first ten months of current fiscal, the spokesman added. He further added that all cement plants that have captive power generation have been affected by increase in GIDC rates by the government and are facing increased cost of operations.
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