News Desk |
The Pakistan cement industry is facing a domestic drop in cement demand, but export data for 7MFY19 shows overseas sales have been strong. Experts believe that with domestic demand experiencing a dip, cement manufacturers have been selling off their surplus inventory to regional markets perhaps with a cut to their margins.
Pakistan’s cement industry received foreign exchange revenue of US$27.34m by exporting 655,317t of cement during the month of January 2019, compared to US$25.89m at 624,714t in the previous month and US$17.88m from 357,371t during January 2018. This shows an increase of 5.6 percent and 52.9 percent in terms of value on Month over Month (MoM) and Year over Year (YoY) basis, respectively, according to the Pakistan Bureau of Statistics.
In terms of quantity, the exports saw a growth of 4.9 percent in January 2019 on MoM and 83.4 percent over January 2018 YoY basis during this period.
The MFN status is accorded under the World Trade Organisation’s (WTO) General Agreement on Tariffs and Trade. Both India and Pakistan are signatories to this and are members of the WTO.
However, on a cumulative basis, in the first seven months of FY18-19, export revenue rose 35.1 percent to US$184.34m with Pakistan exporting 4.32Mt of cement, compared to US$136.47m from 2.718Mt in 7M2017/18 (July 2017-January 2018). In terms of Pakistani rupees, the growth stood at 66 percent.
The breakdown of exports, according to All Pakistan Cement Manufacturers Association (APCMA), shows that export dispatches to Afghanistan and India continued to decline in the 7MFY18-19. Exports to Afghanistan fell by 21.7 percent to 1.02Mt and volumes to India were down 4.6 percent to 648,108t. However, seaborne exports increased by over 57.8 percent to reach 1.201Mt of cement and 100 percent 1.264Mt of clinker during this period.
Pakistan cement exports to India are likely to be affected following the Indian government’s announcement to scrap the ‘Most-Favoured Nation’ status to Pakistan, after an attack on Indian forces in Pulwama, Jammu, and Kashmir, India, recently.
Read more: Pakistan’s total cement dispatches to rise due to exports
According to Al Habib Capital Markets, Pakistan’s cement exports are expected to suffer most due to this unwanted tension between India and Pakistan. During 7MFY19 Pakistan’s total cement exports stood at ~2.876Mt, up four percent, YoY, of which cement exports to India amounted to 648,110t (market share in exports ~22.5 percent) down 4.6 percent, YoY. Pakistan’s total clinker exports reached at ~1.264Mt during this period, of which some were exported to India.
Data released by All Pakistan Cement Manufacturers Association (APCMA) reveals that during FY18, Pakistan’s cement exports to India stood at ~1.212Mt against total cement exports of 4.746Mt (market share ~25.55 percent). There were no clinker exports in FY18.
Based on 7MFY19 cement export data, analysts say that Cherat Cement, Bestway Cement Ltd, Maple Leaf Cement, Attock Cement, DG Khan Cement, and Lucky Cement are expected to be negatively impacted; as a result of a decision of the Indian government, with Maple Leaf Cement and DG Khan Cement bearing the brunt.
Read more: Pakistan cement continues to reign over Stock Market
The MFN status is accorded under the World Trade Organisation’s (WTO) General Agreement on Tariffs and Trade. Both India and Pakistan are signatories to this and are members of the WTO. However, Pakistan is yet to grant MFN to India.