Pakistan's April dispatches hit by COVID-19

Pakistan's April dispatches hit by COVID-19
07 May 2020

All Pakistan Cement Manufacturers' Association (APCMA) released dispatch figures for April 2020 and cumulative 10MFY19-20, showing mixed impact of COVID-19.

Cement dispatches in the country have declined in April 2020 by 23.7 per cent to 3.52Mt from 4.61Mt in April 2019 as both exports and domestic markets crashed, owing to the considerable impact of COVID-19. However, total dispatches inched up by 3.5 per cent to 40.55Mt in the first 10 months of the current financial year when compared to 39.2Mt during the same period last year, mainly on the strength of better performance in pre-pandemic months.
April 2020
According to data compiled by APCMA, the decline in domestic consumption was witnessed both in the northern and southern zones of the country as it fell 19 per cent to 3.271Mt in April 2020 from 4.037Mt in the same month last year. Domestic dispatches from the mills in the south fell by 49.9 per cent from 0.683Mt in April 2019 to only 0.342Mt last month, whereas the mills based in north dispatched only 2.928Mt domestically in April 2020, down by 12.7 per cent YoY from 3.353Mt.
Exports have recorded the first instance of decrease this year as they fell from 574,026t in April 2019 to a mere 249,127t last month, depicting a decrease of 56.6 per cent. Exports from the southern zone declined by 28 per cent from 343,611t in April 2019 to only 247,519t in April 2020. The situation was even more dismal for the mills situated in the north, as the exports in April 2020 were negligible at 1609t, falling 99.3 per cent from 230,415t in April last year.
The breakdown of total dispatches of nine months indicates that domestic dispatches from the north increased by nine per cent to 28.941Mt during July 2019-April 2020 from 26.561Mt in July 2018-April 2019, whereas southern mills have recorded a significant fall in local dispatches, down 29.1 per cent YoY from 6.936Mt to 4.917Mt in 10MFY19-20.
Exports from the south rose by 37.1 per cent from 3.486Mt in the first 10 months of last fiscal to 4.779Mt this year, whereas the mills in north registered 13.6 per cent decline in exports, falling to 1.916Mt from 2.219Mt last year.
Budget FY21 expectation
The Pakistani cement industry is expecting some relief in coming budget FY20-2 to overcome the negative impacts of COVID-19. The sector would welcome some relaxation in general sales tax (GST), federal excise duty (FED) and gas infrastructure development cess (GIDC) for cement sector. This was anticipated by Atif Kaludi, CFO of Lucky Cement during a webinar on Cement Sector of BMA Capital Management, held last week.
According to APCMA, the federal excise duty and sales tax was PKR1460/t (PKR73/bag) (US$9.18/t US$0.46/bag) in 2012-13 while currently it is PKR3380/t (PKR169/bag), therefore representing an increase of 132 per cent during last seven years. The sector paid a higher price of coal as imports were planned pre-pandemic, higher power rates, higher packing material rates and higher wages than six years back. The highest-ever interest rates also impacted the balance sheets of most cement units.
"The construction sector got numerous tax concessions in the construction package announced by the Federal Government but it will prosper only if the industries related with it are also duly accommodated through tax concessions," said an APCMA spokesman.
"The Federal Government which should consider taking back additional taxes and duties that were imposed on the sector in the past two years to enable the industry to remain sustainable," he added.

Published under Cement News