PAKISTAN: Cement dispatches plunge in August

KARACHI: Total cement dispatches dropped by 19 per cent in August 2010 when compared to the same period last year. Data released by Pakistan Cement Manufacturers Association (PCMA) has revealed that total dispatches in August stood at just 2.4 million tons.

Local dispatches have plunged by 25 per cent compared to last year, to about 1.51 million tons. “Recent floods have severely affected the transport of both raw materials and cement dispatches,” a representative of PCMA told The Express Tribune. “During August, much of Khyber-Pakhtunkhwa was inundated and over the past month, the same situation has prevailed in much of Punjab and Sindh,” he added.

“Infrastructure in Khyber-Pakhtunkhwa has been wiped out,” lamented PCMA spokesperson Brig Niazi, adding that “until these roads and bridges are restored, we expect local dispatches to continue to suffer.”

He added that although dispatches in September are expected to improve compared to August, “this month will also be a difficult one for local cement manufacturers”. Niazi pointed out that manufacturing will be stalled for about a week this month on account of Eid holidays. He also explained that accurate assessments of damages and losses to manufacturers in flood-affected areas will be revealed once reviews have been completed after the holidays. “Reconstruction and developments projects that were stalled by floods will also take some time to resume and hopefully demand will revive once the waters recede,” added Brig Niazi.

Rising hurdles to exports

Exports have also declined by six per cent to 0.89 million tons in the outgoing month as compared to August 2009. While this represented a slight improvement from the preceding month, experts contended that foreign sales are likely to suffer in coming months as the rising cost of production is making local cement uncompetitive as compared to regional competitors.

“Dispatches to Afghanistan were stalled for about a week because of flooding,” commented Niazi. He added that “the Indian government is dragging its feet on allowing our products and the official and unofficial barriers they have created are limiting exports through the eastern border,” he added.

Experts highlighted that Pakistani cement manufacturers have had an opportunity to export their surplus product to the Gulf and to African countries recently. However, since then, Saudi Arabia has removed export restrictions against its cement makers. Due to the easy availability of local crude oil, Iraq and Saudi Arabia are able to produce cement at much lower costs than Pakistan.

While local manufacturers insist that their product is of a much higher quality, the higher cost of production renders them uncompetitive compared to producers from Saudi Arabia and Iraq.