Cement export potential to ME, Africa to expand

KARACHI - The Pakistan cement export potential to Afghanistan, Iraq, Middle East and African markets is expected to expand further in the near term with a view to provide a room for cement producers to diversify revenue lines. Topline Securities on Thursday while quoting the findings and considerations of General Manager Attock Cement Irafn Amanullah on the Changing dynamics of Cement Industry in Pakistan said that the demand for cement in the last decade has increased by 235 percent to 33.2 million tons while supply due to expansions has increased to 44.8mn tons and excess supply of 11.6mn tons. The Pakistan cement sector may witness an expansion phase in 2014 due to pickup in local and regional demand, company believes. Currently the combined installed capacity 35.9mn tons in North and 8.9mn tons in South stands at 44.82mn tons while Fauji Cements 2mn ton project is expected to come online this year, which will increase name plate capacity to 46.82mn tons. After this Pakistan will be included in top 20 cement producers, he added. He said that the actual capacity that can be utilized today is 40-41mn tons because there are few capacities that due to old technology are not feasible to operate with current margins adding that on VAT imposition there are some concerns as dealers dont want documentation. While providing a break up of estimated export potentials Irfan Amanullah said that Pakistan has bulk cement export potential of 5mn tons to 27 countries while bagged cement has export potential of 10mn tons. The key challenges cement industry is currently facing which includes higher indirect taxes Rs 700 per ton fixed excise duty, 1 percent special excise duty which make Pakistans cement less competitive against regional players like India and China. With huge potential of exports Pakistan cement industry requires government to take effective measure to support export sales with reduction in Port costs port duties and dock labor cost, increase of rebate on exports, separate births at ports for export clinker and cement, he said. With higher taxes according to him the industry is also facing tough times due to higher power tariffs. Currently the electricity charges on ToD basis stands around Rs 6.63 per KWH, however it depends on the plant running time as during peak hours the tariff rises to almost Rs 11 per KWH and Rs 4 per KWH during non peak hours.