LAHORE - With cement industries operating at 68.86 per cent of its installed capacity, manufacturers are worried by the stagnant domestic demand during the first three months of this fiscal and continuously declining export, which is hurting the viability of the industry.
A statement released by the All Pakistan Cement Manufacturers Association said that during the first quarter of this fiscal the industry dispatched only 7,707,399 tons of cement which was nominally higher than the total cement dispatches of 7,496,470 tons during corresponding quarter of last year.
A spokesman of the APCMA claimed that the local demand increased during the quarter by 5.30 per cent but the decline in exports by 2.68 per cent, reducing the overall gain in dispatches to 2.81 per cent.
He said in September the mills in north dispatched 1,499,246 tons of cement for domestic market and exported only 633,867 tons of the commodity. He said the South based mills dispatched 294,041 tons of cement for domestic and exported only 184,182 tons of cement.
The spokesman said that the total production capacity of cement industry has increased to 44.768 million tons. He said low capacity utilization is particularly more painful for those units that enhanced their capacities in recent years. He said debt servicing has now become a major component of cost as even after three interest rates cuts in past six months the effective bank markup for the industry is still well above 12 percent. He appealed the planners to provide some industry specific interest rebate to the industry to keep it afloat.
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 by our neighbor” he said adding that Pakistan’s cement is preferred by the Indians because of better quality. He said that government failure to push India for removal of trade barriers has denied Pakistan a lucrative market that exists across the border.