Industry perturbed over huge increase in coal prices, despatches dropped by 12.17% in September 2021

by index360

Lahore: Cement despatches declined by 12.17% in September 2021, whereas total cement despatches during September 2021 were 4.589 million tons against 5.225 million tons despatched during the same month of last fiscal year.

The cement manufacturers are worried regarding continuous increase in input cost as coal FOB prices have increased from around $68 per ton in September 2020 to over $210 per ton during September 2021.

According to the data released by All Pakistan Cement Manufacturers Association (APCMA), local cement despatches by the industry during the month of September 2021 were 4.018 million tons compared to 4.095 million tons in September 2020, showing a reduction of 1.88%. Exports despatches suffered a massive decline by 49.45% as the volumes reduced from 1.131 million tons in September 2020 to 0.572 million tons in September 2021.

During September 2021, North based cement mills despatched 3.451 million tons cement in domestic markets showing a decline of 2.04% over 3.523 million tons despatches in September 2020. South based mills despatched 567,445 tons cement in local markets during September 2021 that was slightly less compared to the despatches of 571,639 tons during September 2020.

Exports from North based mills massively declined by 61.63% as the quantities reduced from 287,287 tons in September 2020 to 110,245 tons in September 2021. Exports from South also decreased by 45.29% to 461,340 tons in September 2021 from 843,334 tons during the same month last year.

During the first quarter of the current fiscal year, total cement despatches (domestic and exports) were 12.825 million tons, which calculates to 5.67% lower than 13.596 million tons despatched during the corresponding period of last fiscal year. Further analysis indicate that domestic uptake of the commodity increased by 3.92% to 11.279 million tons from 10.853 million tons during July-September 2020 whereas exports during the same period declined by a massive 43.64% to 1.546 million tons from 2.743 million tons during July-September 2020.

North based Mills despatched 9.483 million tons cement domestically during the first quarter of current fiscal year showing a slight increase of 0.22% than cement despatches of 9.463 million tons during July-September 2020. Exports from the North declined by 37.69 percent to 387,667 tons during July- September 2021 compared with 622,186 tons exported during the same period last year.

Domestic despatches by South based Mills during July – September 2021 were 1.795 million tons showing a healthy increase of 29.15% over 1.39 million tons of cement despatched during the same period of last fiscal year. There was however a massive decline of around 45.38% in exports from the south zone as the volumes reduced to 1.158 million tons in the first three months of the current fiscal year from 2.12 million tons during corresponding period of last fiscal year.

A spokesman of All Pakistan Cement Manufacturers Association said that API4 Richards Bay coal FOB prices have increased from around $68 per ton in September 2020 to over $210 per ton during September 2021. Ocean freight from South Africa to Karachi has also increased from $11 per ton in September 2020 to $30 per ton in September 2021. Pak Rupee parity to US$ has increased from Rupees 165 per dollar to over Rupee 171 per dollar during the same period. He further added that the power and energy rates are constantly increasing and the transportation cost has also gone very high due to increase in petroleum prices adding to the cost of delivery to different destinations. These price escalations have seriously affected the cost of doing business in local as well as international markets.

He also expressed concerns about the slide in demand. He was, however, quite hopeful that the cement industry will regain its growth momentum in the coming months mainly due to government policies related to the construction sector.

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