Karachi —The absence of freight subsidy, lower prices in the regional countries as well as transport bottlenecks due to standing flood water presenting a depressed picture of cement export from Pakistan.
Besides declining cement prices in the regional countries another major factor is the increased production capacity in the regional countries where a number of cement units have come on line, sources said. The lower cement prices in the regional countries also making the export outlook unfeasible especially for the cement industries located in the North zone of the country.
Sources were of the view that the prevailing transport bottlenecks will not be completely resolved in the near-term due to scale of damages to the road communication infrastructure.
It is assumed that on a sequential basis, second quarter of the current financial year 2011 is likely to remain on the weak side yet there is silver lining is also visible regard demand recovery in the second half of the fiscal year when the reconstruction activity takes a kick start with the support of the private sector as well as international financial support for reconstruction of the damaged housing units and infrastructure.
The flood devastations it may be mentioned have resulted in a 22 percent drop in the total sales of cement in the country while exports suffered about 24 percent till September 2010.
The industry circles looking for a gradual recovery to the tune of 5 percent in demand growth during second half of the current fiscal which is being assumed on the expectations of private sector flood reconstruction activity post wheat harvest; partial mobilization of government, donor funds towards rehabilitation of flood affectees and re-building of infrastructure. However timing of reconstruction activities is uncertain so far. As far as cement demand was concerned market sources said that September 2010 was the single worst month of flooding.
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