Thursday, December 9, 2010

PAKISTAN: Pakistan seeks to cash in on cement exports

Cement exports of Pakistan are expected to grow steadily in the years to come, as Russia and Qatar are determined to develop their infrastructure ahead of hosting FIFA’s World Cup in 2018 and 2022, respectively, a brokerage house has said.

“We believe a massive infrastructure build-up would be required in these two countries for hosting the event, especially in the case of Qatar, and we believe that Pakistan would be benefiting the most through exporting labour and cement,” said Atif Zafar, an analyst at JS Research.

The recent past suggested that Pakistan’s cement exporters had notably benefited from the infrastructure build-up in Federation Internationale de Football Association (FIFA) World Cup host countries. South Africa is the most recent example in this case, he added.

Omar Rafiq, an analyst at BMA Capital, was not optimist about seeing massive growth in Pakistani cement exports in step with infrastructure build-up in the two counties. “Pakistan’s cement exports may increase at a negligible pace in these cases.”

He maintained that Saudi Arabia and United Arab Emirates (UAE) would be more suitable countries for Qatar to import cement for the purpose, as these two had closer ties with Qatar than Pakistan.

“At present Saudi Arabia holds an excessive cement production of 11mn tonnes per year, which may be increased in the years to come as it has planned to increase its total product to 64mn tonnes in the next two-three years from 50mn tonnes at present.” 

Similarly, the UAE held 4mn tonnes cement production is in excess, he added.

As far as the case of Russia was concerned then it may opt for importing cement from some European countries, as there were some production lines in the continent, which might be run on 100% capacity for a brief period of time.

However, Zafar said that with Pakistan presently producing an excess capacity of 13mn tonnes and its geographic proximity to both these countries, it was expected that Pakistani cement exports, which currently stand at 10mn tonnes (21% of the total installed capacity), would be rising in the long-term, he said.

“It could be a timely shot in the arm for Pakistan cement exports, which declined after the Dubai financial crisis. Moreover, export prices which came down to $50-52 per tonne at present from a high of $80-85 per tonne in 2008-09 could too see upward revision.”

No comments: