Cement sector recovers after three months; sales up 30pc in June 2020

LAHORE: Cement sales increased by 29.94 percent in June 2020 to 4.623 million tons from 3.557 million tons in June 2019, ending FY2020 on a positive note after posting decrease for three consecutive months.

According to the data released by All Pakistan Cement Manufacturers Association (APCMA), domestic cement uptake increased by a massive 19.63 percent to 3.835 million tons in June 2020 from 3.206 million tons in June 2019. Moreover, exports also increased by 123.89 percent to 0.787 million tons in June 2020 from 0.351 million tons in June 2019.

Domestic cement consumption in the north was 3.384 million tons in June 2020 against 2.750 million tons in June 2019; however, exports from the north declined to 46,025 tons this June compared with 0.145 million tons last June.

In the southern region, the situation was the opposite with domestic consumption declining to 0.451 million tons from 0.455 million tons in June 2019. However, exports increased to 0.742 million tons in June 2020 from 0.206 million tons in June 2019. Overall cement consumption during July-June 2019-2020 inched up 1.98 percent to 47.81 million tons solely on the strength of higher export growth of 19.8 percent that crossed 7 million tons mark after a long time. Domestic consumption however contracted by almost one percent, the first such decline in the last six years.

The performance of cement units in different zones depicted the strength of the south zone in exports and the north zone in local consumption. In fiscal 2019-20 the mills in the north zone dispatched 34.327 million of cement to the local market, up 6.07 percent over the consumption in the previous fiscal. However, it lost 22 percent of the export market by exporting only 1.97 million tons of cement. The region lost Indian market due to protective policies of Indian government and Afghan market due to decline in construction activities in the landlocked country.

In the south zone, mills were badly hit by low consumption in the region as their dispatches declined by 29.37 percent to only 5.637 million tons. However, its exports registered a healthy increase of 46.47 percent, as the zone exported 5.877 million tons of cement in 2019-20. In fact, cement exports were higher than local consumption perhaps for the first time in history.

“The higher uptake in June has provided a hope that the new fiscal year would be better as a result of the incentives provided to the construction sector,” said a spokesman of APCMA. He appreciated the reduction in excise duty on cement, but asked for complete withdrawal of excise on the commodity.

He called the excise duty a punitive measure imposed to curb the use of harmful items. Cement, he reminded, was the backbone of the construction industry that this government wanted to promote.