The price of cement is likely to increase by Rs 12 per 50-kg bag after an increase in federal excise duty (FED) from Rs 1 to Rs 1.25 per kg as per federal budget 2017-18, market experts said Saturday. According to experts the increase comes despite cement prices hitting an all time high in Pakistan, averaging almost double than that of the prices in the neighbouring countries. At present a bag of cement weighing 50-kg costs around Rs 500 in Pakistan whereas the same 50-kg bag costs around PKR 292 in neighbouring India.

According to All Pakistan Cement Manufacturers Association (APCMA) the sale of cement in Pakistan had increased by 10 per cent in the first five months of the fiscal year 2016-17. According to Pakistan Economic Survey 2016-17, the cement sector comprises of 21 companies with the market capitalization of Rs 907 billion in March 2017 as compared to Rs 685 billion on June 30, 2016, showing an increase of 32.4 per cent since June 30, 2016. The sector recorded profit after tax of Rs 61 billion in 2016.

In March 2017, cement dispatches reached almost 4 million tons as the factories utilised their full production capacity to meet robust demand in the local market. The ever-increasing domestic market has vindicated the manufacturers' thrust on adding new capacities. The cement industry is playing its due role to get the momentum going and in April 2017 the industry dispatched 3.576 million tons of cement against 3.551 million tons dispatched during the corresponding month of the last year.

In the last 20 months industry has dispatched 33.880 million tons of cement showing an overall growth of 6.21 per cent. During the period, the domestic consumption increased by 10.74 per cent but exports declined by 18.63 per cent. It is worth noting that the domestic cement consumption during July-April FY 2017 increased by 10.22 per cent in the north and by 13.14 per cent in the southern part of the country.

In contrast, the exports from north declined by 14.42 per cent as compared to a decline of 26.19 per cent in the south. This should be a matter of concern as in the past the south based mills being near to sea were leading cement exporters. The capacity utilisation during the first 10 months of current fiscal year is 87.64 per cent.

The domestic dispatches in April 2017 were 9.53 per cent higher than the dispatches in April 2016. The exports in contrast declined by a whopping 50.75 per cent. This massive decline in exports reduced the dispatches growth in April 17 to only 0.70 per cent. In the first 10 months of this fiscal year, the domestic dispatches increased by 10.74 per cent, while the exports registered a decline of 18.63 per cent.

Copyright Business Recorder, 2017