Ban likely to be placed on cement import

Ban likely to be placed on cement import
Published: 17 May 2006

The Pakistan ministry of commerce has decided to ban the import of cement, and the government has also decided to extend the period allowed for export to the local companies on orders received from the higher authorities, sources in the ministry of commerce told the Daily Times on Tuesday.

“We have received orders from high-ups,” said the sources. “It is also because imports are not serving the purpose for which they were allowed. Under the current conditions, the import of cement is not viable even from China with the cheapest rates, the sources added.

A big quantity of cement has reached the local market, but it is not cheaper than the local cement. So it is not viable to continue importing with subsidy and spending precious foreign exchange.

The letter pointed out the change in the government policy and said steps such as subsidies given to cement import from India and other countries encouraging imports and placing duties on Pakistani cement export, “destroying a hard-won Afghanistan export market” shows that the policy has been reversed. It also said the encouragement to import of bulk cement from China would affect the quality of buildings.

According to cement sector analysts, during the last month the cement sector performance and prices came under lime light with issues such as high cement output prices, which started to move up during March. Since then, prices followed an upward trend and peaked to historic heights of Rs 390 to Rs 450 per bag in March-April, from Rs 270 to Rs 290 per bag during January-February at the retail level. Prices were around Rs 300-350 per bag at ex-factory level.

The massive increase in prices led to action by the government, which came in the form of ban on export and duty-free cement imports with Rs 60 per bag freight subsidy from the region, including India. According to an estimate, net sales of top nine cement companies grew by 47 percent in the first nine months of the current year, mainly due to increased cement dispatches and rising prices, whereas gross profits depicted an 83 percent growth on the back of better retention prices by the producers. Profit before taxes also depicted an increase of 82 percent, however profit after tax growth rate was less around 69 percent.