Cement sales up 15pc in Nov as construction activities boom

LAHORE: Cement sales in the local market rose 15 percent to 3.270 million tons in November over the same month a year earlier as domestic demand grew on rising construction activities and infrastructure developments, an industry official said on Monday. 

In November 2015, domestic cement sales stood at 2.843 million tons.  Cement exports, however, fell 10.39 percent to 0.479 million tons in November 2016 mainly because of a losing market share in Afghanistan.

“The industry has been observing a decline in exports since the beginning of this fiscal year and the worst was seen in November,” a spokesperson at the All Pakistan Cement Manufacturers Association (APCMA) said. “Exports are likely to remain under pressure as Iran penetrates Afghanistan’s market and exports by sea are also on the downward trend.” 

In November, the industry achieved the highest ever capacity utilisation of 98.61 percent by dispatching combined 3.749 million tons of cement as against 3.377 million tons in the corresponding month last year.

Cement industry dispatched 16.251 million tons of cement during the first five months of the current fiscal year of 2016/17, up 9.89 percent as compared to 14.788 million tons in the similar period of 2015/16.

In July-November, local cement sales increased 12.13 percent to 13.709 million tons. Cement exports, however, decreased 0.79 percent to 2.542 million tons.

Cement mills, located in the northern part of the country, dispatched 11.305 million tons for domestic consumption and 1.702 million tons for exports in the July-November period, recording growths of 11.05 percent and 4.30 percent, respectively. Cement manufacturers, based in the southern part, locally sold 2.404 million tons and exported 0.839 million tons, registering a 17.49 percent rise in local sales and a 9.72 percent fall in exports. The industry official expressed satisfaction over the continued growth in domestic demand. 

However, he expressed satisfaction over the continued growth in domestic cement dispatches despite crisis in the real estate sector.

Over the past few months, government authorities and real estate sector locked horn over the taxation issues. The Federal Board of Revenue introduced new property valuation tables for the purpose of deducting capital gains tax. The new rates are somehow higher than the prices set by the provincial authorities. However, the conflict was resolved after both the parties agreed on certain taxation on the difference of actual and declared property values.  

Huge infrastructure project developments undertaken by both the federal and provincial governments are impelling the local cement consumption.   APCMA spokesperson said increased prices of coal, a key fuel for cement production, is pushing up the input cost, while recovery in oil prices will further raise the cost of production.   He urged the government to support the industry by relaxing some taxes, which will decrease cement prices as well as further increase its demand.