Pakistan cement sales growth is expected to remain subdued in the current fiscal year and improve by a mere six per cent in FY 2011-12 against last 10 years’ average growth of 14 per cent.
Cement industry sources said the growth would primarily stem from generic economic growth with some additional demand coming from flood-affected areas for its reconstruction activities. Otherwise, owing to lack of fiscal space and subdued private sector construction activities, the cement dispatches are likely to remain stagnant, they added.
“After a decade long continuous growth of cement dispatches, it fell by 7 percent during FY2010-11. The local dispatches however declined by five per cent to 22.2Mt due to lower utilisation of development funds. While exports fell by 12 per cent to 9.4Mt due to falling exports to Middle East after over capacity in the region and non-tariff export barriers to India,” said Furqan Punjani, a cement industry analyst.
He said that though outgoing fiscal year proved to be difficult for the entire cement sector on account of subdued cement prices in the local market and decline in dispatches, the new year has started on a cheerful note. In the budget FY12 government announced few relief measures which includes reduction in the FED (federal excise duty) and sales tax while completely abolishing the SED (special excise duty).
Along with these, better cement prices on the back of recently adopted price discipline by cement producers would also support the strengthening gross margins.