LAHORE - Cement sector has posted a nominal increase of 0.78 percent in local cement dispatches while export dispatches declined by 2.71 percent in January 2017 compared to this with same month last year.
Due to heavy rains and snowfall across the country during the month of January 2017, domestic cement dispatches remains low which affects the capacity utilization as well.
However, according to data released by the All Pakistan Cement Manufacturers Association (APCMA), during the first seven months of current fiscal year, the cement industry has posted a growth of 9.52 percent in local dispatches compared with local dispatches during same period of last fiscal year. Export dispatches recorded a negative growth of 3.44 percent compared with exports dispatches during the same period of last year. The overall situation during first seven months of current fiscal year showed a 7.45 percent growth compared to the same period of last fiscal year. Capacity utilisation for seven months of current fiscal was 85 percent.
APCMA said that domestic dispatches in January 2017 were 2.722 million tons registering a growth of 0.78 percent, while the exports amounted to 0.376 million tons reflecting negative growth of 2.71 percent, compared to January 2016. Total cement dispatches in January 2017 amounted to 3.087 million tons depicting a growth of 0.34 percent.
During the month of January 2017, exports to Afghanistan decreased. APCMA expressed concerns over falling exports to Afghanistan. “The factors contributing to decline in exports include increase in fuel prices and other input cost, and the most damaging was the barriers erected by the countries we export to, such as anti-dumping duty imposed by South Africa to protect its local industry,” the APCMA spokesman said.
He said that cement industry, in order to meet the massive demand taking place in the country due to various government and CPEC projects, has gone in for an expansion in its capacity by 26.250 million tons per annum. “It will be illogical advice for government to allow import of cement or abolish import duty. On one hand it will deprive government from revenue earned through import duty and on the other hand it will devastate the whole industry expansion plan,” he added.
The cement industry is among the highest contributors to the national exchequer over the last few years. The contribution has more than doubled from Rs39 billion in 2012-13 to Rs83 billion in 2015-16. In last fiscal budget, the government increased Federal Excise Duty on cement from Rs400 per ton to Rs1,000 per ton along with general sales tax of 17 percent. Industry paid Rs2,492 per ton to the national kitty till June 2016. For the year 2016-2017, the government revenue in shape of duties and taxes will increase further from Rs2,492 per ton to around Rs3,400 per ton ie Rs170 per bag.
APCMA once again urged the government to take effective steps in order to stop penetration of Iranian cement in Pakistani markets on the strength of massive under invoicing and misdeclaration. A proper vigilance and accountability system needs to be put in place to stop cement smuggling into the country. The government should also increase Regulatory Duty for import of cement in addition to custom duty in order to protect the local industry.