Economic Survey encompasses cement industry performance in 9MFY19

Economic Survey encompasses cement industry performance in 9MFY19
12 June 2019

Pakistan's government has released its economic survey for 2018-19. Reviewing the performance of the country's industrial sector including cement during 9MFY19, the survey reported that provisional growth in industrial sector has been estimated at only 1.4 per cent, mainly due to the decline by 2.1 per cent in the large-scale manufacturing sector and by nearly two per cent in mining and quarrying.

The cement industry has been under pressure in this fiscal year as development expenditure has been slashed. However, the government's announcement of a programme to build five million low-cost houses  for the homeless in next five years will spur the growth, the survey remarked.

Cement industry performance
In March 2019 Pakistan's cement industry continued to show poor performance. Cement consumption is usually at its height in March as construction activities peak with the pleasant weather and urgency in completing government development works within the financial year. However, total dispatches (including exports) in March 2019 declined by 6.7 per cent to 4.34Mt from 4.652Mt in March 2018. The decline in domestic consumption continued as it went down to 3.858Mt in March 2019 from 4.26Mt in March 2018, depicting a decrease of 9.4 per cent.

Domestic consumption in the north continued to decline as it was only 3.071Mt in March 2019 when compared with 3.543Mt in the year-ago period. Exports from northern mills also declined to 0.131Mt in March 2019 from 0.218Mt in March 2018. Meanwhile, in the south domestic dispatches from the mills edged up to 0.787Mt in March 2019 as compared to 0.717Mt in March 2018. Furthermore, exports from the region doubled from 0.173Mt in March 2018 to 0.35Mt in March 2019.

9MFY18-19 performance
In the first nine months of the current July 2018-June 2019 financial year, Pakistan's cement sector continued to face a lack of domestic demand due to slow economic growth, low development spending and delays in the launch of the government's low-cost housing scheme. Cumulative dispatches during the nine-month period fell to 29.448Mt in FY17-18 from 31.314Mt in 9MFY18-19, whereas exports rose to 5.132Mt from 3.444Mt in FY17-18. According to the Pakistani cement manufacturers' association, APCMA, of particular concern is the continued slump in the northern region where local dispatches have declined by over 10 per cent to 23.199Mt in 9M18-19 from 25.88Mt in 9MFY17-18. However, local dispatches from the mills situated in southern region of the country have increased during 9MFY18-19 by 15.2 per cent to 6.248Mt from 5.426Mt in 9MFY17-18.

Exports also rose in the south by 210 per cent in the current fiscal year, from 1.013Mt in 9MFY17-18 to 3.143Mt in 9M18-19, while in the north the exports stood at 1.988Mt in first nine months of this fiscal year as compared to 2.431Mt during the same period last year, a decline of 18.2 per cent.

Although cement exports posted a significant growth of 32.8 per cent in value and 55.4 per cent in quantity during 9MFY18-19, low domestic sales and significant capacity additions paved the way to foreign markets for cement manufacturers.

Published under Cement News