Cement industry making healthy growth.

Byline: S. Kamal Hayder Kazmi

The experts record that Pakistan's cement industry has recorded a healthy growth during the first nine months of fiscal year July-March FY2020. Cement sector performance has backed through the increased exports mostly clinker which went up by 100 percent during the period. Domestic demand for cement has picked up the pace as Government of Pakistan increased the development expenditures and enhanced remittances inflow may also have uplifted private construction activities.

Moreover, statistics show that the cement industry in the country kicked off the FY20-21 on an exciting note. During the first six months of the current fiscal year, total cement dispatches increased by 15.7 percent, from 24.751 MT in July-December 2019, to 28.628 MT in July-December 2020. Local dispatches have increased by 15.9 percent in July-December 2020 to 23.61 MT from 20.373 MT in July-December 2019. Exports also grew from 4.377 MT in July-December 2019 to 5.017 MT in July-December 2020, showing a growth of 14.6 percent. They also predict local dispatches and exports to increase by 16 and 38 percent YoY, whereas total industry utilisation is predicted to reach 85 percent in FY20-21. On the pricing front, cement prices are forecast to average at Rs 558 (US$3.47) and Rs 617/bag in the north and south, respectively in FY20-21.

No doubt, the cement is considered to be the major element in the construction industry, worldwide. With its directly proportional linkage with the country's economy, cement plays a vital role in upgrading the GDP of Pakistan. The key drivers for cement demand/consumption growth are infrastructure projects (CPEC) & real estate sector. Approximately 45 percent of total cement produced is consumed in real estate sector. It is also said that the growth in domestic cement demand has been complemented by surging exports for the second consecutive months as cement export increased by a whopping 85 percent in March 2018. The Government of Pakistan proclaimed that the fixed tax regime for the construction sector that was introduced earlier this year 2021 had been extended to 31 December 2021. All Pakistan Cement Manufacturers Association (APCMA) mentioned that the rising trend of coal, electricity and diesel prices is affecting the cement sector.

During the last six months coal prices have grown by almost US$35/t. Furthermore, duty and taxes on cement sector are also very high. Cement is subject to federal excise duty at Rs...