LAHORE - Debt servicing has become a major component of cement industry cost as even after three interest rates cuts in past one year the effective bank markup for this sector is still well above 12 percent.
Industry representatives appealed the planners to provide some industry specific interest rebate to the industry to keep it afloat. They said that the total production capacity of cement industry has increased to 44.768 million tons but it is still insufficient, as the low capacity utilization is particularly more painful for those units that enhanced their capacities in recent years.
Experts said that though exports have declined, registering export of 8.568 million tons cement in 2011-12, yet there exist a promising potential in export markets. Renewed development trends are shown in the Middle East and East African markets. Projected sales to India will grow. Bangladesh and Sri Lanka are steady markets for export of clinker. As political and security situation improves in Afghanistan and Iraq, demand of cement will increase. Exploring new markets, like Egypt and Myanmar, will be worthwhile. Cemtech Middle East and Africa and Cemtech Asia discussed global market trends, forecasts, and competitive dynamics, and analysed key developments in world cement. These Conferences have identified the emerging opportunities for international trade of cement.
According to industry representatives, exports to India in fact have been on constant decline ever since the two countries opened their borders for liberal bilateral trade. The decline is not due to lack of cement demand in India but because of very stringent non tariff barriers erected. They added that Pakistan’s cement is preferred by the Indians because of better quality. They said that government failure to push India for removal of trade barriers has denied Pakistan a lucrative market that exists across the border.
They said that industry suffers rapid increases in input costs, unsustainable prices of energy that constitutes more than half of production cost, and rising transportation cost. The industry has been using imported coal as fuel for production of cement and is now looking for least expensive fuel alternatives. Investment in Refuse Derived Fuel (RDF) provides the solution, which is a modern technology using the municipal waste to produce energy.
Fauji Cement has successfully adopted this technology, blending RDF with coal, and others are currently implementing similar projects. Also, projects of power generation from waste heat recovery have been undertaken by the cement industry.