Displaying items by tag: All Pakistan Cement Manufacturers Association

Pakistan: Data from the All Pakistan Cement Manufacturers Association (APCMA) show that exports have been in decline since July 2015. Exports declined by 24% year-on-year to 3.4Mt in the seven month period between July 2015 and January 2016 compared to 4.5Mt in the same period in the previous year. However, domestic cement consumption has risen in the same period, according to local press.

"A substantial reduction in the exports has drastically affected foreign exchange earnings of the country and cement makers are finding it difficult to maintain their existence in export markets because of high costs of business in Pakistan and the absence of export incentives," said an APCMA spokesman.

Cement despatches between July 2015 and January 2016 increased by 6.4% year-on-year to about 21Mt compared to about 20Mt previously. Cement plants sales volumes in the north of the country grew by 14% year-on-year to 14.8Mt from 13Mt. These producers saw exports fall by 22.4% to 2.2Mt from 2.8Mt. Cement plant sales volumes in the south grew by 23% year-on-year to 3Mt from 2.5Mt. These producers saw exports fall by 29.2% to 29.2% from 1.8Mt.

The APCMA recommended that the government should impose an additional 20% duty for cement imports alongside the existing customs duty to protect the local cement industry. It added that taxes on energy inputs such as a gas and coal should be reduced and measures put in place to make exports more competitive.

Pakistan: The All Pakistan Cement Manufacturers Association (APCMA) has said that the growth in the domestic economy has supported overall growth in the cement industry. However it added that the industry has had to approach various decision makers to stop the influx of Iranian cement into Pakistan from Iran via Balochistan. The APCMA said that the industry needs a safeguard mechanism to be put in place to stop the adverse effects of cement smuggling into the country. It stated that the government should impose a 20% Regulatory Duty for import of cement in addition to the current customs duty.

The APCMA spokesperson added that, due to the high cost of doing business in Pakistan, the country's cement industry is losing competitiveness to other countries such as Iran, the UAE and India. The industry has appealed for reduction in energy costs, removal of taxes imposed on gas, a reduction of custom duty on coal to zero and an additional incentive of 5% on export of cement by sea.

Statistics indicate that the cement sector is now almost completely dependent on domestic sales, the share of which has increased to over 80% of total cement sales compared to just 50% in 2008 - 2009, as domestic sales continue to increase, while exports are showing constant decline. Cement dispatches to domestic markets during the month of October 2015 were 2.6Mt compared with 2.1Mt during October 2014, an increase of 24% year-on-year.

Pakistan: Cement exports from Pakistan fell by 36% year-on-year to 467,000t in September 2015, as the import duty by South Africa took a heavy toll on its exports.

"Around 45 – 50% of total cement exports were destined for South Africa before the duty was imposed," said Sheikh Adeel, Senior Manager of Sales and Marketing at Maple Leaf Cement. South Africa has imposed duty as high as 77% on Pakistan's cements. Adeel said that the drop in exports has adversely affected exporters in Punjab. The transportation cost from Punjab to Karachi Port also rose by US$20/t.

Another industry official said that the industry is not utilising its production capacity. "There is enough idle capacity. The government should step in to support the industry to export surplus volumes, otherwise cement exports will continue to decline in the coming months," said Shahzad Ahmed, a spokesman of the All Pakistan Cement Manufacturers Association (APCMA). "We expect the government to announce export incentives for the cement industry."

In September 2014, cement exports stood at 730,000t, according to APCMA data. Total cement dispatches were recorded at 2.95Mt in September 2015 compared to 3.15Mt in September 2014, showing a cut of 6.34%. The industry data showed that cement dispatches to domestic markets were 2.48Mt in September 2015 compared to 2.42Mt in September 2014, up by 2.6%.

The local industry has been demanding that the government curb cement imports from Iran, which they said is eating into local share. "The industry expects the government to take effective steps to stop the penetration of Iranian cement in Pakistani markets through massive under invoicing and/or mis-declaration," said Ahmed. He added that the mills in the south suffered more than those operating in northern part of the country.

In the south, domestic cement dispatches declined to 399,581t in September 2015 from 431,133t in September 2014. Domestic consumption in the north, however, rose to 2.08Mt in September 2015 from 1.99Mt in September 2014. Ahmed said that domestic dispatches in the north were nominally higher than the 2.02Mt of consumption in September 2015. "This shows that the pace of construction in the north has not been hit as badly as in the south," he said. The export decline was almost the same both in north and south. Cement exports from the north declined to 306,564t in September 2015 from 480,025t in September 2014. Exports from the south dipped to 160,698t in September 2015 from 249,906t in September 2014.

Pakistan: Cement exports fell by 26.1% to 560,000t in May 2015 as cheap Iranian cement is eating Pakistan's market share in Afghanistan, according to the All Pakistan Cement Manufacturers Association (APCMA). Pakistan exported 750,000t of cement in May 2014.

"Iranian cement is fast making inroads into Afghanistan," said an APCMA spokesperson. APCMA data showed that exports dropped by 10.8% to 6.64Mt between July 2014 and May 2015. Cement makers exported 7.44Mt in the same period of the 2013 – 2014 financial year.

The APCMA appealed to the government to support local manufacturers in winning back the Afghan market by withdrawing duties, which would enable them to compete with highly-subsidised Iranian cement. There is a 5% federal excise duty and a 17% general sales tax on the retail price of cement. "The taxes are equal to around US$1.56/bag," said the spokesperson. "The incidence of high taxation encourages evasion and negatively impacts consumption." He added that the government should gradually bring federal excise duty to zero, as announced by the previous government.

Exports from the south increased by 4.5% in the July 2014 to May 2015 period. These exports go via the sea. However, exports from the north decreased by 18.3% due to the Iranian cement factor, as exports from the north usually go to Afghanistan. The spokesperson said that Iran is also dumping its cement in Balochistan, Pakistan and that cement smuggling from Iran to Balochistan is resulting in substantial losses to national exchequer. "Policy makers ignored warnings from the cement industry over the inundation of Iranian cement in Afghanistan," he said. "It has penetrated our local market." He said that full taxes are not paid on Iranian cement imports.

A road trailer entering Pakistan from the Taftan border carries up to 60t of cement. A transporter issues two different weight loads receipts, one for the customs department and another one for freight purposes. The APCMA said that if taxes are fully paid, the price of Iranian cement is equal to that of domestic cement.

Pakistani cement manufacturers dispatched 2.49Mt of cement in May 2015 compared to 2.3Mt in May 2014, up by 8%. Cement sales were 25.5Mt in the 11 months that ended on 31 May 2015, compared to 23.6Mt in the corresponding 2013 – 2014 period, depicting over 8% growth.

Pakistan/Iran: The All Pakistan Cement Manufacturers Association (APCMA) has condemned the illegal import of cement from Iran and tax evasions at the import stage by misdeclaration, which is seriously affecting Pakistan's cement industry. The APCMA has urged the government to stop the trade immediately.

An APCMA spokesman said that the quantity of cement being imported from Iran has been found understated on the Customs Goods Declaration form, resulting in a substantial loss to the national exchequer. This is done via the collusion of dealers with Customs departments officials and transporters. Not all of the necessary tax is being paid on Iranian cement imports.

"At present, the country's surplus cement production capacity is more than 20Mt/yr and it is coming under further pressure because of the illegal imports of cement. It is not only damaging the local industry, but also through misdeclaration it is giving a substantial loss to the national exchequer," said the APCMA spokesman. He urged the government to include cement in a negative list of import items so that the country's surplus production capacity could be used to the maximum. "This would help to increase economic growth in the country and will also curb malpractices at different levels."

Pakistan: The All Pakistan Cement Manufacturers Association (APCMA) has asked the Federal Board of Revenue (FBR) to exclude cement from the 'Third schedule' of the Sales Tax act or to fix the maximum retail price (MRP) on the basis of two different zones in the upcoming budget of 2014 - 2015.

In a letter to the FMR chairman the APCMA said, that as the dynamics of every province and region are different, collection of sales tax on the basis of a single MRP across the country would force producers to restrict sales to nearby markets. It added that this would restrict sales to further-away markets reducing the potential revenues the FBR could collect.

The APCMA has proposed a zone-based MRP to protect both local consumers from paying excess prices and producers from paying more to sell cement in outlying markets. It also asked the FBR to introduce a uniform tax rate for the corporate sector.

Cement in Pakistan is subject to various taxes including: Corporate Income Tax - 34% of taxable income; Minimum tax – 1% of turnover; Federal excise duty (FED) – US$3.8/t; and Sales Tax 17% of the MRP. The APCMA has also proposed removing the FED and reducing the duty on alternative fuels to zero. Further suggestions included restoring the initial allowance on plants and machinery to 50% (from 25% at present) to encourage production capacity development and reducing import taxes on raw materials and capital goods for industrial development from 5 to 1%.

Pakistan: Exports of cement from Pakistan to Afghanistan have fallen year-on-year for the first four months of the Pakistan fiscal year that started on 1 July 2013, according to figures from the All Pakistan Cement Manufacturing Association (APCMA).

For the first four months of the 2013 fiscal year Pakistan exported 1.46Mt of cement, less than one third of the 4.4Mt of cement exported in the entire 2012 fiscal year. Exports to India are also down year-on-year, at 0.14Mt for the first four months of the 2013 fiscal year.

Commentators in the Pakistani media attributed the fall in exports to competition from Iranian exports in Afghanistan and falling demand in India. Once NATO troops leave Afghanistan the cement consumption in that country is expected to become volatile depending on whether civil unrest grows or if government development programmes continue. Cement exports to Afghanistan currently comprise 50% of Pakistan's cement exports.

At the beginning of September 2013 Lucky Cement reportedly resigned from the All Pakistan Cement Manufacturers Association. The implications of this departure raise interesting implications for Pakistan's cement industry and its export markets.

Lucky Cement reacted to a growing row over energy prices for cement producers in Pakistan. The government increased electricity taxes for industrial consumers by 55% but only increased gas prices by 17.5%. This has created an uneven rise in the cost of production between those smaller cement producers powered off the national electricity grid and those larger cement producers using captive power plants. Suddenly smaller cement producers have found it much more expensive to make cement than their larger competitors.

Although Pakistan's cement industry contains over 20 producers, it is dominated by four major players - Lucky Cement, Bestway Cement, DG Khan and Maple Leaf – who hold nearly half of the country's cement production capacity of around 45Mt/yr. According to local media covering the spat, Lucky Cement uses 100% captive power generation, DG Khan Cement uses 40% and Maple Leaf Cement uses 45%.

In 2009 the Competition Commission of Pakistan issued fines to 20 cement producers found guilty of acting as a cartel and co-ordinating rises in cement prices. Following the action cement prices fell by 30%. Since then prices have steadily risen again with the industry publicly denying the existence of a cartel as recently as April 2013.

Regardless of whether any collusion exists today, with new cement production capacity announced this week by DG Khan, the incentives for Pakistan's larger cement producers are growing to keep their prices low with the benefit of seizing greater market share. Meanwhile the smaller cement producers could be squeezed on both energy input costs and price.

In Pakistan, if the larger cement producers act on the new market opportunities, industry consolidation seems possible. Internationally, if the big cement producers in Pakistan concentrate more on the domestic market then this presents opportunities elsewhere. For example, markets in East and South Africa receive significant cement imports from Pakistan. If the volumes of these imports decrease then local African producers and rival exporters will benefit.

Changes in Pakistan's cement industry carry implications both at home and abroad in its export markets. Who exactly these changes will be 'lucky' for remains to be seen.

Pakistan: Domestic cement sales in Pakistan reached 25.1Mt in the 2012 – 2013 fiscal year that ended on 30 June 2013, according to data released by All-Pakistan Cement Manufacturers Association Pakistan (APCMA). This is the first time domestic sales of cement in the country have risen above 25Mt/yr. In 2011 – 2012 domestic cement sales stood at 24Mt.

Overall the industry despatched 33.4Mt of cement in the 2012 – 2013 year, with 8.3Mt exported. This is below the record of total cement sales set in 2009 – 2010 of 34.2Mt with 10.7Mt of exports. Data for June 2013 showed that construction activities slowed down, following the Pakistan general election in May 2013. Domestic cement despatches declined by 3% to 2.21Mt in June 2013 from 2.29Mt in June 2012. Exports fell by 9% to 0.67Mt from 0.73Mt.

A spokesman for APCMA hoped that the current fiscal year would lead the cement industry to high productivity as the new government is giving due importance to infrastructure and accelerated economic growth. He added that with proper planning and prudent economic policies, Pakistan has the capability to consume its entire installed cement production capacity of 44.7Mt/yr.

Pakistan: A memorandum of understanding (MoU) has been signed between Lafarge Pakistan Ltd and the All Pakistan Cement Manufacturers Association (APCMA) for provision of health and safety training and awareness to all its members. Amr Reda, CEO of Lafarge Pakistan observed, "The cement industry operates in an environment with multiple types of hazards, making it our priority to ensure the safety of all people, working directly and indirectly, in it."

The APCMA welcomed the initiative and is encouraging all of its members to not only study and apply these safety standards and take the initiative to share the best practices across their organisations. Aizaz Sheikh, CEO of Kohat Cement and Chairman of APCMA stated, "APCMA is thankful to Lafarge Pakistan for coming forward with the idea and are happy to embrace this initiative. The proposal was unanimously approved by the council and the APCMA looks forward to further initiatives under this MoU".

Amr Reda expressed his delight on the APCMA agreement, saying, "We are happy to share our learning and best practices with other companies through the platform of the APCMA. As part of our long-term commitment to health and safety, Lafarge Pakistan will continue to impart knowledge and awareness on this subject to other industrial establishments in Pakistan."