All Pakistan Cement Manufacturers Association (APCMA) released dispatch figures for August 2021 with a positive note that the cement sector posted growth of 22.8 per cent in August 2021 by dispatching 4.336Mt when compared with 3.531Mt during the same month of the previous fiscal year. Out of this total, local dispatches increased to 3.814Mt from 2.805Mt, up 36 per cent. However, exports continued to decline as the volumes reduced by 28.2 per cent from 726,687t in August 2020 to 521,468t in August 2021.
APCMA added that an increase in domestic dispatches is a good sign for the cement industry, and reflects a pick-up in economic activity. However, he added that the government planners should notice declining exports and support the industry to compete in the international markets.
In August 2021 the share of north-based cement mills dispatched stood at 3.141Mt, up 25.4 per cent and southern mills stood at 673,572t, 124 per cent YoY. The exports from northern mills showed a decline of 33.1 per cent to 141,804t and from the south the fell by 26.2 per cent to 379,664t YoY.
Cumulative trends in 2MFY22
During the first two months of the current fiscal year, total cement dispatches (domestic and exports) were 8.235Mt, 1.6 per cent lower than 8.37Mt dispatched during the corresponding period of the previous fiscal year.
Northern-based mills dispatched 6.033Mt, an increase of 1.6 per cent than cement dispatches of 5.939Mt during 2MFY21. Exports from the north declined by 17.2 per cent to 277,422t during 2MFY21 compared with 334,899t exported during the same period last year.
Domestic dispatches by southern mills during 2MFY22 were 1.228Mt, showing a healthy increase of 50 per cent over 818,600t cement dispatched during the same period of last fiscal year. However, there was a massive decline of around 45 per cent in exports from the southern zone as the volumes reduced to 696,823t in the first two months of the current fiscal year from over 1.277Mt during the corresponding period of the last fiscal year.
A rise in production cost
A representative of APCMA said that the landed price of coal was around PKR18,000/t (US$107.9/t) in August 2018 and has increased multiple times since then. The current landed cost comes to around PKR31,500/t, increasing the cost of production approximately PKR90/bag. Similarly, the electricity rate of PKR11.68/unit in August 2018 is now PKR19.40/unit. Other input costs like packing material, provincial taxes on raw material and fuel prices have also risen, increasing the overall production cost. These factors have influenced the cost of production by around PKR35/bag.
