Cement sale up, export down in January

LAHORE: Cement sale marginally increased 0.78 percent to 2.722 million tonnes in January as compared to the same month a year earlier, while exports decreased 2.71 percent to 0.376 million tonnes, industry data showed on Monday. 

Total cement dispatches (sales plus exports) stood at 3.087 million tons in January 2017, up 0.34 percent year-on-year, according to the All Pakistan Cement Manufacturers Association (APCMA).

Heavy rains and snowfalls affected local cement sale. Exports to Afghanistan – a key export destination – fell 4.5 percent to 0.166 million tonnes in January over the same month a year ago. However, exports to India registered a healthy increase of 77 percent to 0.0861 million tons in January this year from 0.049 million tons a year earlier. Exports to India are mainly through Wagah border and southern coast of India. Local cement sales grew 9.52 percent during the first seven months of the current fiscal year of 2016/17. Exports declined 3.44 percent. Total cement dispatches, however, improved 7.45 percent, putting the total industry’s capacity utilisation at 85 percent in July-January.

Cement exports to Afghanistan fell 10.88 percent in the first seven months of the current fiscal year. Exports to India, however, rose a staggering 79.34 percent during this period.  APCMA spokesman said the factors contributing to export decline included increase in prices of fuel and other inputs and barriers erected by the importing countries, such as anti-dumping duty by South Africa. Exports by sea also declined 19.23 percent in the July-January period. Moreover, the spokesman added that in India the import tariff was 19 percent – including three percent education cess – to discourage imports. “This made difficult for us to compete with their local manufacturers.” 

The industry official said cement industry, in order to meet the massive demand in view of ongoing government and China-Pakistan Economic Corridor infrastructure development projects, opted to expand their production capacity by 26.250 million tonnes a year. 

“It will be an illogical advice for the government to allow import of cement or abolish import duty,” the official said. “It will deprive the government of revenue earned through import duty and devastate the industry expansion plan.” 

The cement industry has been among the highest contributors to the national exchequer over the last few years.  The tax contribution more than doubled to Rs83 billion in 2015/16 from Rs39 billion in 2012/13. Government raised federal excise duty on cement to Rs1,000/tonne from Rs400/tonne during the last fiscal year. This is in addition to general sales tax of 17 percent. 

Cement industry would pay Rs3,400/tonne (Rs170/bag) in shape of duties and taxes to the government during the current fiscal year as against Rs2,492/tonne in the previous fiscal year.

APCMA spokesman urged the government to take effective steps to stop penetration of Iranian cement into Pakistani markets through under-invoicing and misdeclaration. 

“A proper vigilance and accountability system needs to be put in place to stop cement smuggling into the country,” the industry official said. “Government should also increase regulatory duty on cement import to protect the local industry.”