KARACHI: Despite robust domestic growth, cement export from Pakistan in Fiscal Year 2015-16 (FY15-16) contracted by 18% to 5.8 million tones against 7.2 million tones in the previous fiscal year.
Cement export is expected to drop further in FY16-17. Exports through sea have taken a major hit, plunging by a massive 33% year on year (YoY) basis to 2.4 million tones, as compared to 3.6 million tonnes in FY15. Industry analysts attributed this decline mainly to imposition of anti-dumping duty by South African government, major capacity expansions coming online globally and currency devaluation in key export markets.
They say that in FY16-17, they expect cement sector exports to continue to falter primarily on the back of export ban lift by Saudi Arabia and influx of Iranian cement in the market. However, the dwindling exports will be more than compensated by a strong domestic demand owing to increased government allocation for Public Sector Development Programme (PSDP), which has been increased by 20% to Rs 1,675 billion in FY17 budget, and robust development in housing.
Seaborne export prices have further declined by $3-4 per tonne owing to bulk supply by Lafarge-global in export markets on reduced prices, greater exports from Iran, and lifting of ban on exports by Saudi Arabia, resulting in stiff price competition in export markets such as East Africa, Yemen and Sri Lanka, the analysts added. Excluding exports to India, which increased by more than 30% in FY16, cement exports to Afghanistan from Pakistan declined by 38% in the same fiscal, and the country witnessed more than 10% decline in cement exports to the rest of the world due to the economic slowdown there.
Analysts at Elixir Research, Karim Punjani and M Ibadur Rehman have said in a report that despite expected fall of exports in FY17, “we remain bullish on local dispatches growth owing to higher allocation for PSDP. They further said that local cement manufacturers were procuring coal at $66-70 per tonne for August delivery.