Large-scale manufacturing production data shows negative growth in Pakistan during the 10 months between July 2018 and April 2019. According to Pakistan Federal Bureau of Statistics, the overall output of large-scale manufacturing industries (LSMIs) fell by 3.5 per cent during this period. Worse still, the LSMI output decreased by 7.8 per cent for April 2019 compared to April 2018 and by 9.4 per cent when compared to March 2019.
Pakistan's cement industry has recorded a 4.4 per cent YoY fall in production during the 10MFY18-19 from 35Mt to 33.5Mt, reportedly due to a drop in local demand amongst other factors. However, in April 2019 alone, cement production increased by 4.2 per cent YoY to 3.94Mt from 3.78Mt.
The cement industry has been under pressure this financial year as development expenditure has been slashed by 40 per cent from last year. Exports to India and Afghanistan have fallen in recent period due to political and other reasons.
Meanwhile, Pakistan's government reportedly approved an increase in gas and electricity prices, effective from 1 July 2019. The decision would impact all manufacturing sectors inducing cement producers, according to industry experts. The Economic Coordination Committee (ECC) of Pakistan's Cabinet approved these hikes last week and the average increase in gas and electricity tariffs would be around 25 per cent and 12 per cent, respectively.
According to a local research house, the gas/power tariff hike is likely to bear limited implications for the cement sector and it may increase production cost and doing business of other stakeholders of industry.
