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Domestic cement sale up 7%, exports decline 20%

09 February, 2011

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KARACHI: Cement sale for domestic market during the month of January 2011 remained 1.907 million tonnes, registering a growth of 7 percent while export was 0.566 million tonnes, showing a 20 percent decline compared with last month i.e. December 2010.

However, during the first seven months of the current fiscal, cement sale for domestic market was 12.01 million tonnes, showing a 9.63% while exports sale was 5.19 million tonnes — a 17.03% decline during the same period.

Cement sale for the period from July 2010 to January 2011 was 17.20 million tonnes, registering a decrease by 12.01% as compared to corresponding period.

The decline is in contrast to the last year when local consumption of cement increased by 14.70% in 2009-10 but the overall increase in cement sales was 9.30% due to decline in exports.

Out of total operational cement production capacity of 41.235 million tonnes, 34.264 million tonnes is in the Northern part of the country while 6.970 million tonnes is in South. Another 2.68 million tonnes capacity will be added this fiscal with operation of new plant of Fauji Cement. The capacity utilisation of the cement industry has constantly declined since 2004-05 when it reached a peak of 91.32 percent. In 2009-10 it dropped to 76.53 percent while during the first seven months of this fiscal, the capacity utilization remained 71.55 percent only.

The mills operating in the north lost almost all export orders because of exorbitant transportation charges from their plants through to the seaports. “The transportation cost has made the cement export unviable for plants located in the upper parts of the country,” said a spokesman of the All Pakistan Cement Manufacturers Association (APCMA).

The industry’s hope of increasing sale through accelerated exports suffered a setback due to exceptionally high increase in transportation cost and governments failure to provide its promised freight subsidy. Exports that increased by 140 percent in 2007-08 to 7.77 million tonnes and then in 2008-09 by over 39 percent next year to 10.75 million tonnes, registering a nominal decline of 0.89 percent in 2009-10 to 10.65 million tonnes. The exports declined by 17.03 percent in the first seven months of this fiscal to 5.19 million tonnes.

Cement sector experts have urged the government to rescue the ailing cement industry that has posted huge losses last fiscal and in the first quarter of this financial year. They pointed out that energy is the major input cost of cement industry and the rates of all fuels like gas, coal and furnace oil have increased extraordinarily.


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