Over 20% unutilised cement to be exported to India.

KARACHI: Over 20 percent unutilised production capacity of cement industry could be put to use by increasing exports to India if non-tariff barriers (NTBs) are removed as per agreed by granting most-favoured nation (MFN) status to India by Pakistan.

Incorporation of Pak-Afghan Chamber of Commerce and Industry could also benefit in increasing cement exports. Its rising exports to Afghanistan reached 4.72 million tonnes at the end of fiscal year 2010-11, which is 50 percent of 9.42 million tonnes total exports, All Pakistan Cement Manufacturers Association (APCMA) statistics stated same ratio for seven months ended in January in the current fiscal year 2011-12.

APCMA Chairman Aizaz Mansoor Sheikh while talking to Daily Times said about 10 million tonnes cement per annum could be exported to India alone resulting in earning millions in foreign exchange if and only if fair trade takes place.

He stated many NTBs are imposed on Pakistani products availability in India and highlighted that delay in quality certification by Indian importers makes the products oversupplied.

APCMA statistics stated exports of 0.402 million tonnes to India were recorded during seven months of the current fiscal year 2011-12 as compared to 0.272 million tonnes in the same period of last fiscal year 2010-11, showing a rise of 48 percent.

It stated annual and monthly cement dispatches are increasing as compared to the same periods in the pervious fiscal years but overall local and export dispatches are not crossing 80 percent of its production capacity for last three years - 74.92 percent dispatches in 2008-09, 76.56 percent in 2009-10, 76.21 percent in 2010-11 and 69.67 percent in seven months of current fiscal year 2011-12. It stated the exports out of total dispatches have been around 30 percent for last three to four years.
Sheikh assumed the reason for such a low demand in the local market is the economic downturn, political instability, etc prevailing throughout the country making this sector dependant on exports. Increasing shortage of about 10 million houses in the country is another factor leaving cement oversupplied. The construction industry posted the lowest growth of only 0.8 percent in the fiscal year 2010-11 that was particularly distressing in the backdrop of the 59-year high growth posted in the fiscal year 2009-10 (28.4 percent).

Talking about the increase in cement prices, he said there is a consistent rise in yearly average input prices of furnace oil, coal, electricity, gas, diesel, petrol, paper bag, inflation and exchange rates to local currency that is much higher than the rise in cement prices.

“We manage due to continuous capitalisation, capital investment and development, but low margins with these high input prices have caused a few industrial units to shut down and are forcing some to capitalise their plants with alternate input materials like tyre, garbage, etc.”

He noted that current depreciation in Pakistani rupee against the dollar is not enough for attaining foreign exchange, rather it is resulting in high prices of input materials, which are being imported from international markets.

He said current plants were capitalised four to five years ago to increase the capacity in the hope of high demand at present that did not result as expected.

Source : dailytimes.com.pk