KARACHI - All Pakistan Cement Manufacturers Association Chairman Aizaz Mansoor Shaikh has said that industry produced 17.94 million ton of cement in the first seven months of this fiscal year which is 3.94 percent higher than corresponding period of last fiscal year.

The surge of 7.21 percent in domestic demand of cement was offset by 3.59 percent decline in exports, Aizaz said in a statement here on Wednesday.

Aizaz said that the input cost over the years has risen tremendously as diesel prices increased by 94.3pc in 2011-12, Power rates went up by 8.74pc in 2011-12 compared to 5.18pc in 2007-8 while rates of coal jumped up by 111.2 percent in 2011-12. He pointed out that cement sector continues to operate below 70pc installed capacity in Jan 2012 while most of the manufacturers are not recovering even full input cost.

He said that cement industry paid heavy price for the expansion in production capacity that was planned on the assumption that the economy would grow at an average of 6 percent or above. Unfortunately, he added, the economic growth has averaged 2.5 percent during past four years that suppressed the demand for cement in the local market.

However on the contrary, cement per bag rates rose by just 6.28 percent from Rs328.5 in 2008-9 to Rs350 in 2011-12. If we see further past four years the cement prices registered growth of 23.1 percent in four years i.e. from 2005-6 to 2008-9, as it rose to Rs328.5 from Rs252.1.

“We always look for ways to lower the energy cost and for new plants. We have to bear research cost, capital cost and the cost to pursue more efficient plants, but this is not usually included in manufacturing cost of cement,” he added.

The ever-increasing prices of diesel, coal and electricity are the major factors contributing to the rampant hike in the cost of production, but the industry has focused more on energy efficient alternate fuel to save costs and minimise the burden on consumers, he added.