LAHORE: The impact of economic contraction became visible in the cement sector as it endured a decline of 5.49% in domestic sales in first two months of the current fiscal year while exports posted a healthy increase of 12.66 percent.
According to data released by the All Pakistan Cement Manufacturers Association (Apcma), a continued contraction in construction activity has played havoc with the cement sector, which had increased its production capacity to 55.995 million tons in the past few years anticipating strong demand.
The industry sold 46.88 million tons of cement in 2018-19, with surplus capacity of 9.12 million tons. According to the association, the domestic market remained under pressure in the last fiscal year, absorbing only 40.34 million tons, which was 2% less than the demand in fiscal year 2017-18.
The new fiscal year, which started in July 2019, added to the misery of the sector as domestic demand decreased 2.55% from 3.04 million tons in July 2018 to 2.97 million tons in July 2019.
Exports, on the other hand, registered a nominal increase of 2% to 0.53 million tons in July 2019 compared to 0.52 million tons in the corresponding month of previous year.
Domestic cement sales stood at 2.66 million tons in August 2019, down 8.58% from 2.9 million tons in August 2018.
During the month under review, exports increased to 0.68 million tons compared to 0.56 million tons in August 2018, registering a healthy rise of 22.67%.
However, overall cement sales declined 3.55% year-on-year, going down from 3.46 million tons in August 2018 to 3.33 million tons in August 2019.
The association pointed out that a consistent increase in domestic demand in the southern region of the country in the last fiscal year saved the cement sector from collapse. However, it said, the demand for cement declined in the southern region by a massive 32.95% in first two months of the current fiscal year 2019-20.
An association spokesperson was of the view that consumption of cement determined employment creation in the country. “As local demand declines, the number of jobs also falls,” he said. “The increasing entry of workforce into the job market demands that steps should be taken to generate employment in the country.”
He pointed out that the cement sector was currently facing a torrid time, lamenting that the state had not helped the sector and slapped further taxes on industries in the ongoing fiscal year.
The spokesperson underlined that by facilitating the construction industry as a whole, the government could reduce unemployment levels in the country.
“Measures like increase in taxes on cement and high power and gas tariffs coupled with axle weight condition on trucks supplying cement have slashed sales of the commodity in the country,” he said. “Following withdrawal of the axle weight condition, the offtake will gradually increase.”
