LAHORE - The cement industry closed the fiscal year 2016-17 on a sour note as the domestic demand declined steeply in June by 19.62 percent that was almost double than the decline of 10.95 percent in exports.

According to industry stakeholders, the decline in domestic demand was beyond the usual reduction in construction activities during Ramazan that fell in June. They said the industry has been warning the planners to reduce excise duty and import duty on coal and check import of under invoiced cement from Iran. They regretted that instead of reducing duties the government has slapped additional tax on cement in the 2017-18 budget. They said this would further reduce domestic consumption and the revenue that the government expects from the new tax would in fact decline because of lower consumption. They said the huge decline in domestic demand in June was shocking for the industry that fears further erosion of demand as a result of new taxation.

During the year 2016-2017, domestic cement despatches by north zone mills were 29.141 million tons and export despatches were 3.150 million tons depicting a growth of 7.72 percent and negative growth of 18.22 percent, respectively. Domestic cement despatches by south zone mills were 6.511 million tons and export despatches were 1.514m tons depicting a growth of 9.47 pc and negative growth of 25.10 percent, respectively. The overall growth in cement despatches during the year 2016-17 was a mere of 3.71 percent. The capacity utilisation for the year 2016-17 was 86.90pc.

The statistics released by the All Pakistan Cement Manufacturers Association (APCMA) revealed that the industry despatched 2.727m tons of cement in June 2017 against despatches of 3.351 million tons in June 2016. For the first time in 11 months, cement despatches declined below 3m tons. The steep decline in domestic demand eroded the excellent growth that the cement sector registered in past 11 months. It was on the strength of that demand in the domestic market that the industry was able to despatch record 40.315m tons of cement during the fiscal year 2016-17. This was 3.71 percent higher than 38.873m tons cement dispatched during year 2015-16.

Industry experts are worried because the entire industry is depending on domestic uptake of cement as the exports have been on constant decline for the last two years. They urged the government to withdraw the tax imposed on cement this year besides withdrawing duty on import of coal to ensure sustained growth of the sector. They said the new taxes imposed on construction related materials including cement would result in negative growth of construction sector.