The performance of the Pakistan cement industry has been remained encouraging and recorded good growth in the fiscal year to-date. Going forward, the prospects continue to be bright, according to the recently-released Pakistan Economic Survey 2016-17, as the government identifies locations for future investment in the cement sector.
The new survey, published yesterday, shows that growth in the cement sector has been underpinned by robust domestic demand, which has enabled local producers to increase capacity utilisation rates.
The outlook remains positive due to the development of housing schemes and increased spending, along with anticipated China-Pakistan Economic Corridor (CPEC)-related projects.
Cement consumption has reached historic heights, touching almost 4Mt in March 2017. Domestic dispatches in April 2017 were 9.53 per cent higher YoY. Exports in contrast declined by a massive 50.75 per cent, which limited overall dispatch growth in April 2017 to just 0.7 per cent.
In the first 10 months (July-April) of FY16-17, the industry delivered 33.8Mt cement showing overall YoY growth of 6.21 per cent. However, while local consumption rose by 10.74 per cent, exports were down by 18.63 per cent.
In the 10-month period, domestic demand increased by 10.22 per cent in the north and by 13.14 per cent in the southern part of the country. In contrast, exports from the north declined by 14.42 per cent compared with a decline of 26.19 per cent in the south. Industry commentators caution that this should be a matter of concern given that southern-based plants, situated by the sea, were the leading exporters.
Capacity utilisation during the first 10 months of the current fiscal was 87.64 percent.
In recent months, Pakistan has lost a major share of exports to Afghanistan due to the high cost of production, according to industry sources. However, in March, a rise in monthly exports by other manufacturing sectors of 17.4 per cent suggest a reversal in this trend thanks to government initiatives.
Locations for future investment
In terms of areas for further investment, in the Mianwali district in Punjab province, mineral resources of limestone, silica sand, fireclay, gypsum and rock salt are available for the establishment cement, glass, ceramic and chemical industrial plants. The Mianwali district also benefits from its strategic position near the CPEC route, which passes near Daud Khel-Kalabagh. Therefore, the establishment of a mineral-based industrial zone near the route's Daud-Khel interchange has been proposed.
Moreover, following the completion of a study for the “delineation of positive and negative areas for installation of cement plants”, the directorate general of Mines & Minerals will offer solicited proposals and process applications for installations for new cement plants in the Salt Range in Punjab province to meet the demand of around 105Mt of cement in coming four years in wake of CPEC.
