Pakistan cement firms cut output

Pakistan cement firms cut output
Published: 22 May 2006

With declining trend in cement prices being witnessed for the last few weeks, some cement firms have reduced their production by over 30 per cent during the last one month. The production of cement, which stood at 63,500t a day on April 13, stands reduced to 43,700t a day on May 12 as the cement industry is of the view that the drop in the production has been made due to “considerable” decline in demand, a senior government official told the Daily Times on Friday.

The cement manufacturers at a meeting on Thursday rejected the government’s claim that its decision of banning export and allowing duty-free import of the commodity had nothing to do with the prices and they called for banning the import and withdrawing the freight subsidy being granted on imported cement.

According to the official, in April when the demand was high, the cement industry was utilizing around 84 percent of its production capacity. Currently, around 63 percent of the production capacity is being utilized, as the cement demand has been on persistent decline, an official of a leading firm said.

Following the imposition of ban on cement export, the cement firms need not to utilize its capacity beyond 63 percent of the capacity. When the demand is not high, then there is no need to produce cement at over 80 percent of the installed capacity. The firm official rejected the government’s claim that cement import along with Rs60 freight susbsidy per bag and ban on export have brought down prices in the market. Even with all concessions from the government, the price of imported cement is near the locally produced. Keeping this in view, it seems clear that imported cement has not given any relief to consumers, the official of the cement firm said.

The government, on the other hand, sees its recently-taken steps as positive. The government’s efforts have arrested the upward trend in cement prices and prices are on decline. According to the government official, the cement manufacturers have been informed that the policy on import and export would remain unchanged until the price of cement stabilized at Rs 290 a bag. The cement manufacturers have also been informed that they should publish ex-factory rate of cement through an advertisement campaign.

The government has also rejected the demand of the cement manufacturers to withdraw the freight subsidy being given on imported cement. No change will be made, unless and until the government is sure that the price of cement bag stabilized in the range of Rs 290 a bag. If prices are brought down at the prescribed level only for a limited time to press the government for changing the existing regime will not be acceptable, the official said.