Cement Despatches Declined by 23.65pc in April

Karachi, May 06, 2020: Cement despatches in the country have declined in April 2020 by 23.65 percent to 3.52 million tons from 4.61 million tons in April 2019 as both exports and domestic markets crashed, owing to the devastating impact of COVID-19.

According to a statement issued by All Pakistan Cement Manufacturers’ Association (APCMA), the cement sector that was already struggling to survive on extremely high input costs, has been badly hit due to lock down in the first half of the month.

The decline in domestic consumption was witnessed both in the North and South zones of the country as it fell 18.97 percent to 3.271 million tons in April 2020 from 4.037 million tons in the same month last year. Domestic despatches from the mills in Southern part of the country fell by 49.85 percent from 0.683 million tons in April 2019 to only 0.342 million tons last month whereas the mills based in North despatched only 2.928 million tons domestically in April 2020, down by 12.68 percent from 3.353 million tons in same month last year.

Exports have recorded the first instance of decrease this year as they fell from 574,026 tons in April 2019 to a mere 249,127 tons last month, depicting a decrease of 56.6 percent. Exports from the Southern Zone declined by 27.97 percent from 343,611 tons in April 2019 to only 247,519 tons in April 2020. The situation was even more dismal for the mills situated in the North as the exports in April 2020 were negligible at 1609 ton, falling 99.3 percent from 230,415 tons in April last year.

The total despatches though inched up by 3.45 percent to 40.55 million tons in the first ten months of this fiscal as compared to 39.20 million tons during the same period last year, mainly on the strength of better performance in pre-pandemic months.

Domestic despatches from North increased by 8.96 percent to 28.941 million tons during July19-Apr 20 from 26.561 million tons in July18-Apr19 whereas the mills in South have recorded a significant fall in local despatches, down 29.11 percent from 6.936 million tons in first 10 months of the last fiscal to 4.917 million tons this fiscal.

Exports from South rose by 37.08 percent from 3.486 million tons in the first ten months of last fiscal to 4.779 million tons this year whereas the mills in North registered 13.63 percent decline in exports, falling to 1.916 million tons from 2.219 million tons last year.

“The decline in construction activities around the world including Pakistan contributed to downfall in demand, however, the cement sector even otherwise was operating under acute distress,” said the spokesman of APCMA.

The federal excise duty and sales tax was Rs. 1,460/- per ton (Rs. 73 per bag) in 2012-2013 while currently it is Rs. 3,380/- per ton (Rs. 169 per bag). An increase of 132% during last seven years. The sector paid a higher price of coal as imports were planned pre-pandemic, higher power rates, higher packing material rates and higher wages than six years back. The highest ever interest rates also impacted the balance sheets of most cement units.

“The construction sector got numerous tax concessions in the construction package announced by the Federal Government but it will prosper only if the industries related with it are also duly accommodated through tax concessions,” said APCMA spokesman.

“The Federal Government which should consider taking back additional taxes and duties that were imposed on the sector in the past two years to enable the industry to remain sustainable,” he added.

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