Cement demand tumbles on high prices, construction slowdown

KARACHI: Due to tax-driven price increases and a construction slowdown during the monsoon season, local cement sales plunged by 27.54 per cent year-on-year to 2.752 million tonnes in August.
Cement exports also fell 16pc to Rs613,857 tonnes compared to 730,755 tonnes in August 2023.
As a result, overall cement despatches (local sales and exports) tumbled by 26pc to 3.366m tonnes from 4.528m tonnes in August 2023.
According to data released by the All Pakistan Cement Manufac­turers Association (APCMA), total cement despatches during 2MFY25 were 6.375m tonnes, down 18pc from 7.758m tonnes in the corresponding period last fiscal year.
Domestic shipments during 2MFY25 were 5.214m tonnes against 6.578m tonnes during the same period last year, showing a reduction of 21pc. Export despatches were also 1.65pc less as the volumes reduced to 1.161mn tonnes compared to 1.181m tonnes during July-August FY24.
An APCMA spokesman mentioned that the domestic demand has continuously been showing a negative trend for the last 12 months as the industry struggled to cope with higher taxes and economic uncertainty. Heavy monsoon rains also impacted construction activities in August, he added.

“In the current budget, Federal Excise Duty (FED) on cement has been doubled along with a sharp increase in other federal and provincial taxes. No other businesses have been taxed in such an enormous proportion,” he said, urging the government to review the taxation measures as the construction sector is suffering due to a continuous decline in domestic offtake, which in turn is hurting the employment opportunities for skilled and unskilled labour putting more pressure on the already struggling economy.
Nasheed Malik of Topline Securities said the sales decline in August was due to a slowdown in construction activities mainly driven higher cost of inputs and 29pc and 19pc higher YoY cement bag prices in North and South.
In August, a significant event was Punjab-based players securing stay orders from courts regarding increased royalty per bag. However, due to the provision of bank guarantees, bag prices increased by Rs65-75 in the middle of the month.
He said that total cement capacity utilisation in August was estimated at 47pc versus 44pc in July and 66pc in August 2023.
He said the average retail price in August increased by 1pc in the North and remained almost unchanged in the South, as per the Pakistan Bureau of Statistics data.
Published in Dawn, September 6th, 2024