LAHORE: With capacity utilisation of cement industry lowest since 2003-04 at 74.86 percent, it posted a production decline of 8.71 percent in the first ten months of this fiscal year with exports declining by 12.99 percent.
According to the data of All Pakistan Cement Manufacturers Association, the country produced 25.722 million tons of cement during July-April 2010-11.
Local consumption stood at 18.06 million tons, 6.76 percent less than consumption during the corresponding period of last year.
Exports stood at 7.65 million tons against 8.64 million tons during the same period of 2009-10.
A leading cement producer, Tariq Saigol, said that the dilemma for the cement industry is that its cost of production is higher than the sales it could generate in the domestic market. He said under current economic scenario, it is not possible to increase cement prices.
“This capital-intensive industry is slowly bleeding to death.”
He said the only way out of the predicament is that the government waive the excise duties of over Rs50 per bag. This, he added, would enable the cement sector to keep the current prices.
He warned that if it was not helped, most of the industry would cave down and default on its loans. “If not facilitated, cement prices might shoot to Rs550 per bag that would be supplied by the few units that would survive,” he said.
He added that the capacity of the industry has already declined by three million tons from its peak due to complete closure of some units.
Cement production increased in April 2011 by 2.78 percent when compared with April 2010.
A spokesman for APCMA claimed that the production statistics do not reveal the entire picture.
He claimed that most of the industry is posting losses due to extraordinary increase in input costs.
He said prices of coal and other fuels are at their historic highs and electricity rates are unbearable for all industries.
He said that most of the cement industry of the country is located in the northern part. He said production capacity of 34.264 million tons in the northern parts is 83.3 percent of the total capacity of 41.135 million tons.
He said production capacity of units located near sea ports in southern parts is 6.970 million tons. He said the industries in southern parts are better placed because of proximity to sea that enables them to export a part of their production along with local sales.
He said the cement units in the northern parts produced only 14.75 million tons in the first ten months of this fiscal, which is 11.2 percent less than the production during the corresponding period of last fiscal.
He said the mills in southern parts produced 3.307 million tons in the first ten months, 19.28 percent higher than the cement produced by the region during the corresponding period of last fiscal.
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