A promising start to the new year in Pakistan

A promising start to the new year in Pakistan
05 January 2021

The cement industry in Pakistan kicked off the FY20-21 on an exciting note. During the first six months of the current fiscal year, total cement dispatches grew by 15.7 per cent, from 24.751Mt in July-December 2019, to 28.628Mt in July-December 2020. Local dispatches have increased by 15.9 per cent in July-December 2020 to 23.61Mt from 20.373Mt in July-December 2019. Exports also increased from 4.377Mt in July-December 2019 to 5.017Mt in July-December 2020, showing a growth of 14.6 per cent. 

Sources note that this is the reflection of the uptick in demand accompanied by the government incentives for the construction sector and steady cement price recovery can further unlock value. 

They also predict local dispatches and exports to grow by 16 and 38 per cent YoY, whereas total industry utilisation is estimated to reach 85 per cent in FY20-21. On the pricing front, cement prices are forecast to average at PKR558 (US$3.47) and PKR617/bag in the north and south, respectively in FY20-21.

Construction package
Prime Minister Imran Khan last week announced that the fixed tax regime for the construction sector that was introduced earlier this year had been extended to 31 December 2021. "I want to give [the construction sector] good news for the new year. We have extended the fixed tax regime to 31 December 2021," the Prime Minister said during a live address to the nation. 

APCMA concerns
A spokesman of All Pakistan Cement Manufacturers Association (APCMA) mentioned that the rising trend of coal, electricity and diesel prices is affecting the cement sector. During the last six months coal prices have increased by almost US$35/t. Furthermore, duty and taxes on cement sector are also very high. Cement is subject to federal excise duty at PKR1500/t and PKR75/bag, and general sales tax at 17 per cent (PKR77/bag). Total direct taxes on cement per bag are PKR152/bag. He requested the government to give tax concessions on the cement sector which will reduce the cost of production, giving a boost to construction activities and employment in the sector.

Published under Cement News