PAKISTAN: Pakistan cement off take slightly recovers

The News reported that total cement off take in October stood at 2.94 million tonnes against 2.92 million tonnes recorded during the same period last year.

Analysts said that the contribution of local sales in the overall sales mix continues to increase with the domestic dispatches at 2.09 million tonnes up by 5.8% while exports were recorded at 0.86 million tonnes down by 9.7%. Export volumes in October remained lacklustre, declining by 9.7% to 0.86 million tonnes.

Mr Furqan Ayub an analyst at JS Global said that “Interestingly exports in India have soared to 0.09 million tonnes highest exports since May 2008 from 0.043 million tonnes however the biggest export market continues to be Afghanistan, constituting 57% of the total exports.”

He said that with cement retail price of over PKR 410 to PKR 415 per bag locally incentives to export remain low. Additionally demand itself has jaded in many of the export markets. Thus explaining the 26% drop in exports via sea to 0.28 million tonnes.”

He said that average retention prices approximately rose by 31% in the Q1 of the current fiscal year as the industry remained adamant on passing through the cost to the end user. Considering this resolute attitude of the industry, analysts expect high cement prices are likely to remain firm.

PAKISTAN:Building materials: Hike in prices badly hit construction industry

Unprecedented hike in prices of building materials, bricks, cement, steel, crush, sand, sanitary fittings, pipes, electric wires etc have badly hit the construction industry shattering hopes of at least 60 percent Pakistani house -holds to build a pucca house in their life time.

According to a recent survey the construction cost of a five marla or a ten marla house has been doubled in six months in the provincial capital. Prices of Kiln baked bricks have shot up by almost 100 percent from Rs. 4000 to Rs. 7800 per thousand after levy of 16 percent GST on bricks that kiln owners have refused to pay.

Price of another essential building material cement has spiked up to Rs. 420 - 430 per 50 KG bag, an increase of Rs. 100 per bag due to what cement manufacturers claim increase in input costs and recession in the housing and construction industry.

The rate of ordinary grade steel used in laying roofs, basements and other structures, had also increased to Rs 75,000 per ton from the previous retail price of Rs 55,000 per ton.

Similarly suppliers of sand and crush have also increased prices of their material by about fifty percent.

Experts of construction industry say that housing and construction sector is the second largest job provider to unskilled daily wagers who are facing untold financial hardships after alarming decline in the construction/building activities.

They said it is an irony that the government has identified Housing & Construction Sector among the driver of economical growth as not less than 60 industries are linked to this sector, yet the present Federal and provincial governments have taken no step to check the increase in prices and activate this sector.

According to a World Bank report if the current shortfall of nearly five million proper housing units persists in Pakistan it would lead to new slums in major cities, already a grave problem due to continuous migration of population from rural areas to the urban centres in search of jobs.

Economic experts say that in the current economic scenario, a part of economic revival depends on investment in housing sector: a significant avenue for banks financing and household investment and a factor in long-term economic growth.

A businessman Samiullah Durrani told Business Recorder that the government's persistence to levy GST on rural based kiln owners has aggravated the situation, as the kiln owners have increased prices of bricks without paying any tax to the government. He suggested that the government should reduce duties and taxes on building materials including bricks, cement etc. and advance liberal loans through House Building Corporation to reactivate construction and housing business in the country.

INDIA: India Cement swings to profit in Q2

India Cement has postednet profit of Rs 697.1 million for the quarter ended Sept. 30, 2011 as compared to net loss of Rs 336.3 million for the quarter ended Sept. 30, 2010.

Total income has increased 29.51% from Rs 8,428.4 million for the quarter ended Sept. 30, 2010 to Rs 10,916 million for the quarter ended Sept. 30, 2011.

Shares of the company declined Rs 0.75, or 0.97%, to trade at Rs 76.50. The total volume of shares traded was 62,350 at the BSE

PAKISTAN: Cement makers want dues cleared

The All Pakistan Cement Manufacturers Association (APCMA) has urged the government to clear their long-awaited dues on account of inland-freight subsidy. Chairman APCMA Aizaz Mansoor Sheikh has written a letter to the ministry of finance on the issue. In the letter, Sheikh recalled that the Trade Development Authority Pakistan (TDAP) had allowed inland freight subsidy at the rate of 35 percent for cement exports by sea for the period from March 26, 2010 to June 30, 2010.

The aim of giving subsidy was to boost cement exports of the country as high inland-freight cost had made it impossible for cement makers to compete in the international market.H e said that the cement industry, after fulfilling all conditions, started filing claims for inland-freight subsidy to the TDAP and as of date, cement makers have filed claims worth Rs269.293 million.

Unfortunately, chairman APCMA said, neither any cement maker had so far received any claimed amount from the State Bank of Pakistan nor any intimation had been received from the TDAP regarding clearance of the said dues. “It was learnt that Ministry of Finance has not released any funds yet for the claims,” chairman said in the statement. 

He further pointed that cement production capacity in Pakistan is 44.217 million tons per annum. Eight percent of this capacity is situated in the North and 20 percent in the South of the country. During the year 2010-2011, domestic demand for cement was standing at 22.002 million tons and exports were 9.419 million tons, thus leaving substantial production capacity unutilised, he added.

He said that the sprit behind allowing inland freight subsidy was to maximize cement exports via sea and facilitate the cement units located in the north zone in particular. 

Keeping in view, the inland-freight subsidy facility, the cement makers had accepted export orders on the assumption that the freight claims would be honored, he added. Chairman APCMA requested the finance secretary to intervene in the matter and issue instructions to ensure immediate clearance of long-awaited inland freight subsidy claims by the cement manufacturers. “Delay in clearing legitimate claims of the cement industry is leading to colossal losses,” he added.

INDIA: JK Cement plans UAE plant

India-based cement manufacturer JK Cement has announced an investment of Rs750 crore (Dh55m) to set up a white cement plant in the UAE, through a subsidiary, with capacity to produce 0.6 million tonnes per year (mtpy).

This is in sharp contrast to the earlier announced plans for a 2.2 mtpy, $400mn project. The UAE cement plant by Kanpur-based cement maker JK Cement was scheduled to go on stream by the middle of 2010, but was hit by deteriorating economic conditions amid global slump and meltdown.

The new plant will be set up at the Fujairah Free Trade Zone and, according to JK Cement’s filing to Bombay Stock Exchange (where the form is listed), the plant will have provision to change over to produce grey cement.

“JK Cement has informed BSE that the Board of Directors of the Company at its meeting held on November 11, 2011, inter alia, has approved setting up of cement plant at J. K. Cement Works (Fujairah) FZC with production capacity of 0.6 Million Ton per annum of White Cement with a provision to change over to 1.01 Million Ton per annum capacity, grey cement at a total cost outlay $150 million. The project will be funded at a debt equity ratio of 2:1,” the filing said.

Fujairah Investment, an undertaking of the Fujairah government, will have a 10 per cent stake in the greenfield plant, that is being set up by JK Cement’s local subsidiary JK Cement Works (Fujairah).

The plant, which was earlier planned with a debt-equity ratio of 1:2, reportedly ran into financial troubles during the global economic slowdown, which has seen cement demand dwindle in the Gulf countries. A.K. Saraogi, chief financial officer, JK Cement, said in 2008 that bankers weren’t ready to fund the project and it wasn’t a good time to go ahead with high interest rates.

“We have to revisit the strategy and rework the whole project cost of the proposed UAE unit. We initially had estimated the project to go on stream by the middle of 2010, he had then said.