Cement sales contract 38pc in May as corona crisis aggravates downbeat demand

LAHORE: Cement sales recorded a double-digit decline for the consecutive three months in May as the lockdown and seasonal slowdown aggravated the negative effects of falling development spending, industry officials said on Wednesday.

All Pakistan Cement Manufacturers Association’s (APCMA) data showed that domestic cement uptake declined a massive 38 percent to 2.27 million tons in May. That compared with 3.64 million tons in May last year.

The officials said the decline in cement despatches is mainly due to Ramzan, Covid-19 and Eid holidays which slowed the construction activity. Cement sales have so far recorded double-digit monthly decline third times this fiscal year.

“The cement sector has been in dire state for the last few months. It posted a growth of 31 percent in domestic cement consumption in February this year and after that the decline has been consistent, 16.69 percent in March, 18.97 percent April and now 38 percent in May,” said a spokesperson of APCMA.

“The negative growth is due to COVID-19 impact and the delay in implementing public sector development projects.”

The government recently eased lockdown imposed in late March after the coronavirus outbreak. This compounded the impact of decelerating growth and reduction in development spending.

Though the government announced construction package and exempted the sector from lockdown, the relief is yet to have a positive impact.

In May, exports also decreased 25 percent to 0.363 million tons in May. That compared with 0.483 million tons in May last year. Cumulatively, cement dispatches were recorded at 2.63 million tons in May as against 4.12 million tons a year earlier, showing a decrease of 36.1 percent.

“The progress on the export front has also been gloomy. It posted a growth of over 48 percent in February, but exports declined to 5.67 percent in March, massive 56.6 percent in April and 24.8 percent in May,” added the APCMA’s spokesperson. “The government should realise that the construction sector is the largest provider of employment to the unskilled workforce in Pakistan and decline in cement consumption means low construction activities and substantial increase in unemployment in the country.”

In July-May, total cement despatches were 43.189 million tons as against 43.327 million tons during the same period last fiscal, posting a decline of 0.32 percent. Cement sales declined to 36.1 million tons from 37.14 million tons, while exports increased 14.1 percent to 7.059 million tons. APCMA data further showed that domestic cement consumption in the northern region was two million tons in May as against 3.1 million tons in May last year. The consumption in the southern zone declined to 0.269 million tons from 0.589 million tons. In the same way, exports from the north-based mills declined to 7,520 tons from 0.164 million tons. From the south, which is the hub of cement exports, there was a nominal increase in exports from 0.319 million tons in May 2019 to 0.356 million tons in May 2020 as the lockdown brought transportation and port activities to halt.

In July-May, domestic sales from north-based mills stood at 30.94 million tons, compared to 29.61 million tons during the same period last year, posting a less than anticipated growth of 4.5 percent. However, exports from the region during the period under review declined 19.24 percent to 1.924 million tons.

South-based mills sold 5.18 million tons cement locally during 11 months, declining 31.1 percent year-on-year. Their exports, however, registered a healthy increase of 34.9 percent to 5.13 million tons during the period under review.