Displaying items by tag: Pakistan
Iran snookers Pakistan’s cement exporters
02 September 2015South African cement producers may be cheered this week with the news that Iranian cement is causing grief in Pakistan once more. Imported cement from Iran is allegedly undercutting local product in Pakistan through massive 'under-invoicing.' Sources quoted in Pakistan – itself a cement exporter (!) – described the situation as 'incomprehensible.'
The issue here is that Iran is doing to South Africa what Pakistan is doing to South Africa: selling cement cheaper than locally produced product. It's especially ironic this week because one Pakistani cement producer, Lucky Cement, is taking the fight against South African anti-dumping duties to the courts.
A report from July 2015 reckoned that Pakistan's cement exports might drop by 10 – 15% at the start of 2016 as economic sanctions on Iran are lifted. The report had a bit more sense than the usual scaremongering. It predicted that removing sanctions in Iran would not affect competition in Afghanistan as Iranian producers generally targeted Kandahar.
Despite this, cement exports to Afghanistan from Pakistan hit a high of 4.73Mt in the 2010 – 2011 financial year, according to All Pakistan Cement Manufacturers Association (APCMA) data. Since then they dwindled slightly for the next couple of years before decreasing more sharply from mid-2013. Overall exports fell by 11.57% to 7.2Mt in the 2014 – 2015 period. Pakistan's exports to Afghanistan may have been hit by the departure of North Atlantic Treaty Organisation (NATO) forces and a new cement plant in neighbouring Tajikistan.
In part the battle seems to be about tax. In June 2015 the APCMA lobbied the Pakistan government to cut duties. At the time these included a 5% federal excise duty and a 17% general sales tax on the retail price of cement. One APCMA spokesman reckoned that these taxes added US$1.56 per bag of cement. More recently the APCMA rallied against a tax on cement exports and an increase in import duties on coal. In this climate, repeated news stories on Iranian exports to Pakistan dodging taxes don't sound so good.
Meanwhile, back in South Africa, Lucky Cement has started to take legal action against anti-dumping duties imposed upon its cement exports by the International Trade Administration Commission of South Africa (ITAC). The ITAC imposed provisional anti-dumping duties of 14.3 – 77.2% on Portland Cement originating in or imported from Pakistan from 15 May 2015 for six months. The duty was imposed on bagged cement. Pakistan-based cement producers may defend themselves by saying that they are following the laws of the countries they are exporting to. In theory Iranian exports to Pakistan that pay the correct taxes should be the same price as Pakistani products.
What this debacle shows is that things could get a whole lot worse for coastal cement markets within easy reach of Iran once the sanctions fall. National bodies like the ITAC across the Middle East, South Asia and East Africa should start tightening up their import policies now.
Cherat Cement revenue up but profit down
28 August 2015Pakistan: Cherat Cement Company posted a profit of US$12.4m in the year ending 30 June 2015, a slight decrease from US$12.7m a year earlier. Turnover rose to US$63.2m compared to US$62.1m a year ago.
Pakistan producers slam Iranian imports
27 August 2015Pakistan/Iran: The Pakistani cement industry has once again spoken out against imported cement from Iran and alleged massive under-invoicing across the border. Industry sources said that the Iranian cement, which was earlier being smuggled, is now entering Pakistan at very low rates due to under-invoicing. They say that importing cement into Pakistan, itself a cement exporter is 'incomprehensible.'
Taha Khan Javed, Elixir Securities Pakistan's head of research, said that the government needs to realise that this lax attitude towards under-invoicing and the 'rampant' import of Iranian cement is hurting both the government and the local cement industry. Pakistan already has surplus capacity and its exports are falling due to a slowdown in exports to Afghanistan and other regions. In the case of Afghanistan this is also, in part, due to Iranian imports.
Lucky Cement signs SAP contract with Siemens
24 August 2015Pakistan: Lucky Cement has signed a contract with Siemens Pakistan to implement an SAP Enterprise System across its operations. The move will integrate all the departments, including finance, production and supply chain. Lucky Cement is the first Pakistani cement plant to implement the system.
"We have always focused on innovation and excellence as the building pillars of our continuous growth," said Executive Director, Noman Hasan. "Through SAP, we aim to drive progress through greater integration of our various locations, agility and enhanced efficiency of our operations and further efficiencies in our processes."
Pakistan: A memorandum of understanding has been signed between the Punjab Government and Chinese cement producer Yantai Baoqiao Jinhong to establish a US$350m cement plant in Salt Range.
Attock Cement reveals results and expansion plans
14 August 2015Pakistan: Attock Cement has released its results for the 2015 Pakistani fiscal year, which ended on 30 June 2015. The company earned a net profit of US$21.7m, a 9.5% increase on the US$19.6m that it made in the year to 30 June 2014. Its revenue rose by 4.3%, from US$122.7m to US$127.6m.
The results were released at the same time as an announcement of the company's expansion plans. In a notice sent to the Karachi Stock Exchange, Attock Cement announced the expansion of its production capacity by installing a US$120m cement kiln line at its existing facility in Hub, Balochistan.
Attock Cement is the third cement manufacturer to announce an expansion after DG Khan Cement and Cherat. There is anticipation that the government will shortly ramp up infrastructure developments, leading to anticipation that there will be higher demand for cement in the coming years.
Bestway Cement signs MoU with NUST Institute of Civil Engineering for research on innovative cement solutions
07 August 2015Pakistan: Bestway Cement signed a Memorandum of Understanding (MoU) with NUST Institute of Civil Engineering on 27 July 2015. The MoU marks a collaborative effort between both organisations to promote research and development of cutting edge, innovative construction materials and building solutions in Pakistan.
Irfan Sheikh expressed his delight and stressed the need for construction materials related cutting-edge research and development in Pakistan. In July 2015, Bestway Cement commissioned two 13.5MW waste heat recovery (WHR) power plants at its cement plants in Hattar and Farooqia. Aimed at not only reducing Bestway Cement's reliance on national grid, the WHR plants will help to alleviate the country's power crisis to a certain extent and reduce greenhouse gas emissions.
"We aim to develop products through collaborative research and development that will add value for our customers. Innovation defines our focus on our customers' needs, provides solutions for improving quality of life and generates much needed economic activity in the country, while ensuring that our environment is safeguarded," said Irfan Sheikh, director of finance and CFO of Bestway Cement and Pakcem Limited.
Pakistan/Iran: Pakistan's cement exports may drop by 10 – 15% at the start of 2016 as more Iranian cement will enter on the world market after sanctions have been lifted, according to Dawn.
Pakistani manufacturers will have to increase their export market destinations. However, local Pakistani cement industry officials believe that 'quality-conscious' countries like the UAE, India, Qatar and Sri Lanka may still prefer Pakistani cement as it is 'better' than its Iranian counterpart.
The officials are optimistic that the budget allocation for Public Sector Development Programme (PSDP) may play a positive role in incrasing domestic cement consumption and may dilute to some extent the negative impact posed by the anti-dumping duty in South Africa on Pakistani cement and influx of Iranian cement on the international market. Around 60 – 65% of Iran's cement exports go to Iraq, 10 – 15% to Afghanistan and the remaining to other countries including Pakistan.
The removal of sanctions is not expected to aggravate competition in Afghanistan, as it is only feasible for Iranian producers to target the Kandahar region closer to the border. The main market for Pakistani producers is Kabul and Jalalabad, where Iranian cement will not be competitive due to the higher transportation cost.
Iran is the fourth largest manufacturer of cement in the world with a capacity of around 80Mt/yr. This capacity is set to rise in the next two years. The country's cement production stands at 66Mt/yr, around 84% capacity utilisation, out of which 28% is exported.
Pakistan: Bestway Cement has inaugurated two eco-friendly, 6MW and 7.5MW waste heat recovery (WHR) plants, with a combined cost of US$16.7m, at its cement plants in Hattar and Farooqia iniHaripur, according to The News International.
"The investment of nearly US$16.7m to set up these WHR power plants in challenging economic times is a testament of Bestway's unwavering commitment towards propelling economic development of Pakistan," said Anwar Pervez, group chairman. "It follows the company's successful acquisition of Lafarge Pakistan, now known as Pakcem Limited, for an enterprise value of US$329m in July 2014." He announced plans for another US$30m of investments in the company, including a 9.8MW WHR power plant at its Kallar Kahar operations later in 2015. The company installed its first 15MW WHR power plant at Chakwal in 2011.
Pakistani cement producers oppose tax measures
27 July 2015Pakistan: Cement manufacturers have voiced their opposition to the various tax measures announced in the federal budget for 2015 - 2016 that they say will hurt investor sentiments in general and burden cement consumers in particular, according to The Express Tribune.
"Finance minister Ishaq Dar should revisit some fiscal measures that will lead to an increase in the cost of doing business and are against the norms of taxation," said Muhammad Ali Tabba, chairman of All Pakistan Cement Manufacturers Association. In a statement, Tabba pointed out that taxpayers with a taxable income of US$4.91m or more would be liable to pay a 3% super tax, which was discriminatory. The super tax would also be charged on export income, though exports were subject to the final tax regime at the rate of 1%.
Protesting against the increase in import duty from 1% to 5% on coal, Tabba said that while the cement manufacturers were making efforts to reduce the cost of production in order to compete at the global level, the duty hike would increase the business cost. Fuel constitutes more than 50% in the overall production cost and cement manufacturers will have no choice but to pass this additional burden on to consumers, he added.