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TRADE CHRONICLE<br />
Pakistan: growth in local<br />
cement consumption unabated<br />
Pakistan's cement<br />
industry dispatches<br />
to domestic markets<br />
during <strong>May</strong> <strong>2017</strong><br />
stood at 3.399Mt<br />
c o m p a r e d t o<br />
3.065Mt during<br />
same month last<br />
year.<br />
The home market<br />
shows a healthy<br />
increase of 10.90<br />
per cent on YoY<br />
basis. However,<br />
exports during <strong>May</strong><br />
<strong>2017</strong> were 0.309Mt,<br />
against 0.558Mt<br />
during <strong>May</strong> 2016,<br />
showing a reduction<br />
of 44.58 per cent.<br />
Total dispatches<br />
(local and export)<br />
during <strong>May</strong> <strong>2017</strong><br />
w e r e 3 . 7 0 8 M t ,<br />
compared to 3.623Mt during same<br />
month last year, showing an<br />
increase of 2.36 per cent.<br />
On cumulative basis, during the last<br />
11 months (July 2016 to <strong>May</strong><br />
2 0 1 7 ) , d o m e s t i c c e m e n t<br />
consumption has increased by<br />
10.76 per cent to 37.589Mt, against<br />
35.523Mt of corresponding period<br />
last year. But cement exports<br />
declined by 21.27 per cent to only<br />
4.319Mt, during the same period,<br />
compared with 5.486Mt for the<br />
corresponding period last year.<br />
A l l P a k i s t a n C e m e n t<br />
Manufacturers Association<br />
(APCMA), in statement regretted<br />
that the government slapped undue<br />
additional taxes on cement in<br />
federal budget <strong>2017</strong>-18. This<br />
increase may hurt the growth of the<br />
industry that has been posting<br />
healthy growth during last 18<br />
months.<br />
Pakistan Economic Survey forecasts growth in cement industry<br />
The performance of the Pakistan<br />
cement industry has been remained<br />
encouraging and recorded good<br />
growth in the fiscal year to-date.<br />
Going forward, the prospects<br />
continue to be bright, according to<br />
the recently-released Pakistan<br />
Economic Survey 2016-17, as the<br />
government identifies locations for<br />
future investment in the cement<br />
sector.<br />
The new survey, released recently,<br />
shows that growth in the cement<br />
sector has been underpinned by<br />
robust domestic demand, which<br />
has enabled local producers to<br />
increase capacity utilisation rates.<br />
The outlook remains positive due<br />
to the development of housing<br />
schemes and increased spending,<br />
along with anticipated China-<br />
Pakistan Economic Corridor<br />
(CPEC)-related projects.<br />
Locations for future investment<br />
In terms of areas for further<br />
investment, in the Mianwali district<br />
Pakistan FY18 budget<br />
'neutral' for cement industry<br />
Announcing its FY18 Budget, the<br />
Pakistan government has increased<br />
the allocation for its Public Sector<br />
Development Program (PSDP) and<br />
reduced corporate tax, but on the<br />
other hand Federal Excise Duty<br />
(FED) has been raised and no steps<br />
were taken to arrest dwindling<br />
cement exports.<br />
Finance Minister, Ishaq Dar, in his<br />
budget <strong>2017</strong>-18 has proposed the<br />
a l l o c a t i o n o f P K R 1 0 0 1 b n<br />
(US$9.5bn) for the PSDP in FY17-<br />
18, of which 67 per cent will be<br />
dedicated to infrastructure projects.<br />
Meanwhile, FED has been<br />
increased from PKR1/bag to<br />
PKR1.25/bag. In addition, the Risk<br />
Sharing Guarantee Scheme will be<br />
in Punjab province, mineral<br />
resources of limestone, silica sand,<br />
fireclay, gypsum and rock salt are<br />
available for the establishment<br />
cement, glass, ceramic and<br />
chemical industrial plants. The<br />
Mianwali district also benefits<br />
from its strategic position near the<br />
CPEC route, which passes near<br />
Daud Khel-Kalabagh. Therefore,<br />
the establishment of a mineralbased<br />
industrial zone near the<br />
route's Daud-Khel interchange has<br />
been proposed.<br />
M o r e o v e r, f o l l o w i n g t h e<br />
completion of a study for the<br />
“delineation of positive and<br />
negative areas for installation of<br />
cement plants”, the directorate<br />
general of Mines & Minerals will<br />
offer solicited proposals and<br />
p r o c e s s a p p l i c a t i o n s f o r<br />
installations for new cement plants<br />
in the Salt Range in Punjab<br />
province to meet the demand of<br />
around 105Mt of cement in coming<br />
four years in wake of CPEC.<br />
launched to cater for rising housing<br />
demand which will provide 40 per<br />
cent credit guarantee covers to<br />
banks and other financial<br />
institutions.<br />
Local analysts have deemed the<br />
'budget'<br />
n e u t r a l<br />
f o r t h e<br />
c e m e n t<br />
industry,<br />
s t a t i n g<br />
t h a t<br />
increase in FED will ultimately be<br />
passed on to consumers. However,<br />
they caution that it will take time to<br />
pass on the increase due to existing<br />
pricing issues in the north of the<br />
country. Should local producers<br />
absorb the duty, earnings are<br />
expected to be affected by 8-9 per<br />
cent, they note.<br />
TRADE CHRONICLE - <strong>May</strong>.~Jun. <strong>2017</strong> - Page # 18
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