Impact of economic contraction was visible in the cement sector, as the first two months of this fiscal saw domestic demand declining by 5.49 percent while exports posted a healthy increase of 12.66 percent.
The regular contraction in construction activity has played havoc with the cement sector, which saw its capacity increased to 55.995 million tons. The industry dispatched 46.88 million tons of cement in 2018-19 leaving a surplus of 9.12 million tons. The domestic market remained under pressure in the last fiscal as well absorbing only 40.34 million tons, which was almost 2 percent less than 2017-18.
The new fiscal year that started in July further added to the misery of the sector. The domestic demand decreased by 2.55 percent, from 3.04 million tons in July 2018 to 2.97 million tons in July 2019, while the exports in July 2019 was 0.53 million tons registered a nominal two percent increase as compared to the corresponding month of last year was 0.52 million tons. The domestic sales in August 2019 stood at 2.66 million tons which decreased by 8.58 percent as compared to 2.90 million tons in August 2018. Exports increased from 0.56 million tons in August 2018 to 0.68 million tons in August 2019, registering a healthy rise of 22.67 percent. However, the overall dispatches in August 2019 declined by 3.55 percent from 3.46 million tons in August 2018 to 3.33 million tons in August 2019.
It is worth noting that the regular increase in domestic demand in the southern area of the country last fiscal saved the sector from total collapse.
This fiscal the uptake of cement has declined in the South by massive 32.95 percent in the first two months of this fiscal. The uptake in the north inched up by only 1.66 percent that could not compensate for the decline.
A spokesman of All Pakistan Cement Manufacturers Association said the consumption of cement determines the employment creation in the country. He said as local demand declines the number of jobs also register a decline. He said the ever increasing entry of workforce in the job market demands that steps should be taken to create new jobs.
He said cement industry currently is facing a torrid time. The state has not helped its cause by slapping further tax on the industry this fiscal.
He said by facilitating the construction industry as a whole, the government could reduce the ever increasing unemployment in the country. He said steps like increase in taxes on cement; high power and gas tariffs accompanied with axle weight condition on cement dispatches reduced the uptake of the commodity in the country. He said after withdrawal of axle weight condition the uptake would gradually increase.