Pakistan cement exports suffer YoY fall

Pakistan cement exports suffer YoY fall
Published: 21 March 2011

Pakistan exported 588,386t of cement with a value of US$22.529m in February 2011 compared to 470,667t at US$22.351m in January 2011. This reflects a monthly growth of 25.01 and 0.8 per cent in quantity and value terms, according to data released by Pakistan’s Federal Bureau of Statistics.
 
AHCM Research has reported that on MoM basis, cement exports registered growth primarily due to higher exports to Afghanistan but overall export dispatches continued to fall amid lower international prices making Pakistan’s cement uncompetitive for producers both in general terms and in particular for those in the north.

Compared with February 2010 data, (691,744t at US$31.818m) cement exports registered a decline of 14.94 per cent in terms of volume and 29.19 per cent in terms of value. 
On a cumulative basis, total cement exports during first eight months of the current fiscal (July 2010-February 2011) were down to 5.5Mt at US$267.206m compared to 6.67Mt at US$321.090m in the corresponding period a year earlier. This is a YoY decrease of 17.53 and 16.78 per cent in terms of quantity and value, respectively.
 
The unit value during July-February 2011 stood at US$48.56/t against US$48.125/t in the corresponding period last year.
 
Afghanistan was Pakistan’s main export market. However, local industry players told CemNet that exports to other international markets suffered due to poor demand as well as political unrest in some Middle East countries. Competition with other regional countries such as Iran, India and Saudi Arabia also hindered trading volumes.
 
The All Pakistan Cement Manufacturers Association (APCMA) has pointed out that new tax measures prepared by the country’s Ministry of Finance, Economic Affairs (Revenue Division) and announced by President of Pakistan Asif Ali Zardari last week will also increase cement production costs.  Thus, Pakistan’s cement exports are expected to be further impacted in the coming months.
 
The government has levied a one time surcharge of 15% in income tax during the tax year 2011 and a special excise duty rate has been increased from one per cent to 2.5 per cent. This will increase the production cost per bag of cement by PKR 7.
 
In response, the APCM has appealed to the government to remove the excise duty and lower other tax rates for the survival of the cement industry and to avoid the closure of more cement plants.
 
Due to rising production costs, particularly increasing coal expenses, four cement plants have ceased production: Javedan Cement, Dadabhoy Cement Industries, Zeal Pak Cement, and AC Rohri Cement. Meanwhile, three leading cement manufacturers and exporters have shut their wet-process lines.