Cement exports from Pakistan drops due to COVID-19 in 10MFY20
The Federal Bureau of Statistics (FBS) of Pakistan has released cement export data for the 10 months of July 2019 to April 2020. It visibly carries the impact of coronavirus on the cement industry in the country.
Pakistan's cement industry has earned export revenue of US$223.20m by exporting 5.949Mt of cement and clinker in 10MFY19-20, compared to US$243.12m from 5.738Mt of exports in the year-ago period. This represents a 8.2 per cent decline in terms of value in dollars, but adds a growth of 3.7 per cent in terms of quantity, during this period, as reported by FBS.
In local currency terms, the export value increased by 8.3 per cent to PKR34.96bn (US$217.4m) from PKR32.27bn during this export period. However, the cost per tonne fell from US$42.42/t in 10MFY18-19 to US$37.51/t in 9MFY19-20.
In April 2020 alone, revenue shrank to US$13.13m on the export of 363,563t from US$16.15m with cement exports of 434,499t in March 2020. This represents a contraction of 18.2 per cent and 16.3 per cent both in terms of value and quantity, respectively.
Besides, when compared with data of April 2019 (US$21.86m from 531,802t), a negative trend was also observed. The value of exports decreased by 39.9 per cent and 31.6 per cent in terms of quantity YoY.
Export challenges
The export of cement to Afghanistan has been disturbed due to the closure of the border. In contrast, no export dispatches were made to India since March 2018, after Delhi increased the import duty and rendered exports from Islamabad uncompetitive.
All Pakistan Cement Manufacturers' Association (APCMA) is also silent about export breakdown for the last two months.
Inayat Ullah Niazi, CFO of DG Khan Cement, while discussing the outlook of the cement sector, in the backdrop of COVID-19 pandemic, at a recently organised Webinar by BMA Capital Management, has stated that cement export has become more competitive in the past couple of months due to diversion of Vietnamese cement from China to Bangladesh. As a result, export prices to Bangladesh have fallen by up to US$25-27/t from US$30-32/t. However, he expressed hope that price levels would be normalised once the export demand of Vietnamese cement from China revives.
Similarly, Atif Kaludi, CFO of Lucky Cement, had stated that on the exports front, Bangladesh and Africa are Lucky Cement’s more critical export markets, followed by Sri Lanka and Afghanistan. The company has exported 1.6Mt during 9MFY20, out of which 50 per cent was clinker.
He was quite optimistic that once the lockdown is over, local and export dispatches would reach to pre-COVID levels by June. The export orders were not cancelled and are being held, for the time being, he remarked. The CFO personally felt that local demand growth for next year could be in the range of 5-10 per cent.
Meanwhile, the export of cement to Afghanistan was resumed. Pakistan, in the middle of May, had decided to open its border crossings with Afghanistan for 24 hours-a-day and six days-a-week to facilitate cross-border trade. The trade was affected due to the COVID-19 pandemic in both countries.
