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Need to lift up cement sector growth in Pakistan

International studies revealed that the worldwide cement trade enters 2020 with a mixed outlook. The Cement demand growth is possibly going to be stuck at a moderate pace in most regions. Geographical region demand is foreseen to decline once more, due to of lower demand in Asian country and Turkey. Rising mercantilism costs are the most optimistic trade variable, with costs foreseen to enlarge a minimum of in line with inflation. The studies also showed that the shipping prices are predicted to enlarge because of the new International Maritime Organization rules. Pressure on the trade to curb carbonic acid gas emissions has inflated sharply, resulting in variety of recent initiatives to deal with this drawback.

Pakistan Exports Despatches
Months |—————–2019 – 2020—————|
Cement Clinker Total
Afghanistan India Other (Sea) (Sea) Exports
July 223,377 138,331 171,122 532,830
August 181,747 159,826 344,141 685,714
September 242,906 192,208 362,558 797,672
October 248,710 131,545 404,177 784,432
November 261,201 170,088 375,232 806,521
December 201,863 148,191 419,932 769,986
Total 1,359,804 940,189 2,077,163 4,377,156
Growth(%) 46.33% -100.00% -11.58% 100.00% 22.91%

Statistics showed that in the rest of Asia during 2019 the cement demand growth slowed piercingly, as trade tensions impacted nations that usually rely on exports. During 2020 a moderate recovery in cement demand is forecast, with a growth of 2.5 percent. This is well below the trend of present years. Furthermore, a resumption of infrastructure spending is predicted to increase cement demand in the Indonesia and Philippines. A recovery in Asian nation is anticipated as Chinese-backed infrastructure are restarted. It is conjointly discovered that Japanese demand is expected to stay resilient following the Tokyo Olympic Games thanks to variety of enormous comes. Among tougher markets, South Korea is troubled thanks to cooling measures within the property market, election uncertainty is anticipated to carry back growth in Myanmar, and far weaker demand looks possible in city because the demonstrations take their toll.

In the developing countries like Pakistan, the cement is divided in two regions; North and South. North comprises of KPK, AJ&K, northern areas of Punjab and some areas of Balochistan. South region comprise of Sindh and Southern Balochistan. Statistics also showed that as at March-2019, North region has installed capacity of 42.3 million ton pa–75 percent of total Pakistan’s operational capacity. Total 14 cement players affiliated with distinct sponsoring groups are operating in northern region. It is also recorded that export avenues feasible for north players are Afghanistan and India; lesser reliance on exports as demand from local market remained healthy in last few years; demand was mainly stagnant in 1H FY2019.

 

The Pakistan Federal Bureau of Statistics (PBS) has calculated that the latest statistics for large-scale manufacturing industries for the period July-October 2019. It records a pessimistic trend in the country’s manufacturing sector during the first four months FY19-20, counting the mixed cement production facts during this production period. It is also important to note that on the directives of Prime Minister Imran Khan for creating the general public personal Partnership Authority (PPPA) totally useful through placement of its rules, the Government of Pakistan needs to launch PSDP-Plus with portfolio of over Rs 5 trillion (US$32.2 billion) for next 3 years.

Pakistan is currently under tight scrutiny of the International Monetary Fund (IMF) program, top officials of the Prime Minister’s Office came up with the idea for launching Public Sector Development Program (PSDP) Plus for execution of 53 projects through Public Private Partnership (PPP) mode to kick-start sluggish economic activities and achieving growth rate of 6 percent. Statistics also recorded that the cement industry is sitting on a huge unutilized capacity. It will dispatch just over 47m tons this year at the current rate against the installed capacity of 59.65 m tons.

The overall output of LSM declined by 6.48 percent for July-October 2019 as against to the corresponding period previous year. Furthermore, the production in July-October 2019 as against to July-October 2018 has raised in fertilizers and leather products while it has significant declined in pharmaceuticals, automobiles, food, beverages and tobacco, coke and petroleum products, iron and steel products and electronics.

Statistics also revealed that the Pakistani cement production remains flat to 13.3 m tons between first four months of the current financial year from 13.3 m tons in the last year’s equivalent period. However, this stagnant trend has been reversed in the month of October 2019, when cement production registered a growth of 3.33 percent to 4.092 m tons as against to 3.960 m tons in October 2018.

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