CEMENT INDUSTRY OF PAKISTAN
Aug 13 - 19, 2012
Growth of cement industry is very important for every economy, when Pakistan came into being four cement plants were inherited with a total capacity of 0.5 million tons but today cement sector is contributing above Rs 30 billion to the national exchequer in the form of taxes. Currently there are 29 cement manufacturers that are playing a vital role in building up the country's economy and contribution towards growth and prosperity. Cement industry is also serving the nation by providing job opportunities and presently more than 150,000 persons are employed directly or indirectly by the industry.
The cement industry of Pakistan entered the export markets a few years back, and has established its reputation as a good quality product. The year 2007 was the year when the exports to Afghanistan, UAE andIraq reached 2.13 million ton but the financial year of 2011-2012 was not very fruitful for the cement industry of Pakistan. High demand of cement in local market increased competition in the international markets and a fall in profit margins marked the highlights of the financial year and the broken promises by government, poor infrastructure conditions, increase in raw material (coal) costs and high energy costs further added to the misery of the cement manufacturers. During the last few years, nature also seemed to be harsh on the cement industry. There were massive floods which disrupted all the distribution channels and pegged the economy back. Lack of distribution channels meant that there was disruption in the supply of key raw materials such as coal and limestone and the cement could not be transported over to the market place for sales.
During the financial year Government cut down on its Public Sector Development Program (PSDP) by 77 per cent this was mainly because the allocated funds were not utilized properly, the budget for the Fiscal Year 2012 does bring some hope though the private sector demand was weak throughout the year. This was due to low per capital income and little investor confidence in the economy. The private sector took on little or no construction activity which forced the players in the industry into severe price competition forcing the manufacturers to sell a cement bag for as low as Rs235 although, later on the manufacturers disciplined their prices which reached the Rs380 per bag mark.
Unfortunately the international market usually do not provide much support to the cement manufactures but still in the past cement industry had gradually made its way to becoming one of Pakistan's major export industries. However, after experiencing years of growth the cement industry had to face a tough year in the international market because of many reasons. In the past cement has been exported to Afghanistan, India, Sri Lanka, China and Africa. However, in the outgoing year there was some increased competition from the Middle East and the cement industry was hit with a fall in cement exports. The cement exports fell by 11.55 per cent from 10,657,235 M Tones to 9,426,112 M Tones in a current year. The cement industry follows an oligopolistic market structure and currently does look shatters but still there are many reasons to be optimistic. Extreme damaged caused by floods has to be re - constructed. Urbanization is also a growing trend in Pakistan and this brings along it the demand for increased construction. The development in Afghanistan is on a rise as well especially after a growing GDP. The cement market should look to capitalize on that.