Source: World Cement Association |
Last year, Pakistan produced 41.14 million tons of cement, according to International Cement Review. The country's cement industry has already built capacity to produce 59.5 million tons in anticipation of future demand for housing and infrastructure. World Cement Association expects Pakistan to produce 85 million tons, 2% of the world's cement production in 2030.
Cement Sales in Pakistan. Source: Bloomberg |
Currently, China produces more than half of all the cement used in the world. India produces 8% and and European Union 3%. The three will continue to be at the top in 2030. However, China's share will drop to 35% while India's share will double to 16%.
Top Cement Producing Countries in 2019 |
Pakistan's domestic cement sales grew 9.2% in October, 2019 from the same month last year. Total sales (local and export) in 4 months period between July and October 2019 stood at 16.117 million tons, 4.5 per cent higher than 15.419 million tons during the same period last year. Cement consumption is an important indicator of the state of economy. It is the most important construction material. It drives construction industry that is among the biggest employers in the world. Cement is used to build homes, factories, schools, hospitals, roads, bridges, ports and all kinds of other infrastructure.
Recent Spike in Public Sector Development Spending (PSDP) |
Development of infrastructure under China Pakistan Economic Corridor projects is continuing to drive cement demand in the country. In addition, construction of major new housing communities is underway. One example of such a community is Karachi's Bahria Town. It is being built on the outskirts of Pakistan's financial capital is among the world's largest privately developed and managed cities. It is spread over an area of a little over 70 square miles, larger than the 49 square miles area of San Francisco. When completed, Bahria Town will house over a million people, more than the entire population of San Francisco.
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South Asia Investor Review
Karachi's Bahria Town
M5 Motorway to Boost Pakistan's Transport Sector
Pakistan is World's Fastest Growing Steel Producer
Despite a decade of much slower economic growth than the previous one, Pakistan continues to make economic progress. You note household car ownership is now at 9%, up from 6% a few years ago. Now that the exchange rate has settled at fair market value, I expect exports to start rising sharply. The Economist just reported their year end numbers and show Indian GDP per capita as 25% higher than Pakistan, but I think much of that gap is due to bad statistics. PAkistan's GDP has not been rebased since 2006, it was supposed to rebased in 2018, but the PMLN government didnt accomplish that. At this point, the PBS has not clarified when a rebasing can or will be done. My guess is that the GDP is 20% higher than the current reported figure, which would put Pakistani and Indian GDP per capita about even.
ReplyDelete#Pakistan records 28% growth in #export of #cement/clinker in 8 months of fiscal year. It reached 5.94 million tons in 8MFY19-20 & can be attributed to an increase in cement exports to #Afghanistan & unprecedented surge in clinker exports to world #market https://www.cemnet.com/News/story/168502/pakistan-records-28-growth-in-export-of-cement-clinker-8mfy20.html#.XnVW9qlWhdY.twitter
ReplyDeleteAll Pakistan Cement Manufacturers' Association (APCMA) has reported that country saw a growth of 28 per cent in cement and clinker exports during first eight months of the ongoing financial year 2019-20. It reached 5.939Mt in 8MFY19-20 and can be attributed to an increase in cement exports to Afghanistan and unprecedented surge in clinker exports to the global market.
However, Pakistan's Federal Bureau of Statistics is yet to release official data for the export of cement and clinker from Pakistan for the period of February/July – February 2019-29.
According to APCMA, cement exports to Afghanistan rose by 54.8 per cent to 1.737Mt 8MFY20, but exports to India remain suspended since last year. Cement exports from Pakistan to other international markets fell by three per cent to 1.297Mt. However, clinker exports continued to bode well, recording growth of 100 per cent with dispatches of over 2.904Mt clinker.
Outlook
Moving forward, the corona virus pandemic has engulfed global trade and industry. Pakistan has closed its borders with Afghanistan and Iran in a bid to stop spread of virus and this has also suspended export of cement from Pakistan to Afghanistan.
In addition, State Bank of Pakistan (SBP) is scheduled to announce its monetary policy today. The industry, including cement, is desperately expecting reduction in interest rate from 13.25 per annum following the impact of the corona virus, slowdown in the world economy, little fall in inflation, etc. If is reduced, it would greatly benefit the industry on financing front in Pakistan.
#Pakistan moves to save face as #coronavirus hits Belt and Road. "The world....will be a different place by the time the pandemic is over. Investment flows will shrink, and China will be one of the very few countries with available capital" #China #CPEC https://asia.nikkei.com/Spotlight/Belt-and-Road/Pakistan-moves-to-save-face-as-coronavirus-hits-Belt-and-Road2
ReplyDeleteThe government of Pakistan has ordered the resumption of all infrastructure and energy projects that are part of China's Belt and Road Initiative, but experts believe the move is a matter of face-saving.
Work on the China-Pakistan Economic Corridor, a major piece of the Belt and Road, stopped when the novel coronavirus started to spread in Pakistan in February. According to Johns Hopkins University data, Pakistan has confirmed 9,216 cases as of Tuesday, including 192 deaths.
Naghmana Hashmi, Pakistan's ambassador in Beijing, told Pakistani media on Sunday that a number of mechanisms have been established to complete all corridor projects within the prescribed time frame. But analysts say restarting the projects at the height of the pandemic is meant to spare Beijing and Islamabad embarrassment.
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Amid the economic crisis, some have questioned the economic viability of Belt and Road projects. According to the Planning Commission of Pakistan, the country's top development planning body, Chinese skilled laborers are paid 1,300% more than Pakistani laborers for the Main Line 1 (ML-1) railway project, a discrepancy it says must be rationalized.
The commission has also asked Pakistan Railways to evaluate the impact of a huge Chinese loan of almost $9 billion for the ML-1, which is the single largest infrastructure project for the corridor in the country. Pakistan expects 90% of the funding for the ML-1 to come from the Chinese loan. The commission fears the terms may saddle the country with heavy debt if it is not looked into now.
On the other hand, there are bullish voices who say that resuming Belt and Road projects is worth the risk.
Hasaan Khawar, a public policy analyst based in Islamabad, believes the corridor's special economic zones can help Pakistan solve its economic woes. "The world is changing fast, and it will be a different place by the time the pandemic is over. Investment flows will shrink, and China will be one of the very few countries with available capital," Khawar said. He added that the corridor and the zones provide a ready framework for Pakistan to attract Chinese capital and should, therefore, be a priority for Pakistan.
Malik believes that the aftermath of the COVID-19 crisis will leave China better positioned as a global power and savior of a world in deep crisis. After this, the world will see a continuation and expansion of Belt and Road projects, he says.
Kugelman sees the corridor as the most concrete and active part of the Belt and Road and says its trajectory will be shaped to a great extent by how the corridor develops. He adds that if corridor projects are put on hold until the pandemic has ended, the Belt and Road as a whole could take a pause. If they move ahead, that portends more forward movement for the initiative in the near future, Kugelman says.
#PAKISTAN - #Cement price up by Rs55/bag in Punjab, KP. Big difference in prices in north (Rs 505-525/bag) & south (Rs. 650/bag) regions..."we can call it that the cement sector has reached up to its old price level from where it declined.” #construction https://www.intercem.com/Intercem-Insights/News/ArtMID/683/ArticleID/1851/PAKISTAN-Cement-prices-raised-by-Rs55-per-bag-in-Punjab-KP#.Xw0C0wBNcFA.twitter
ReplyDeletePakistan cement manufacturers on Wednesday increased cement wholesale prices by upto Rs55/bag (or $0.375) in northern region (Punjab and Khyber Pakhtunkhwa), cement dealers confirmed to The News.
This increase would be effective from the today (Thursday). In South regions (Sindh and Balochistan) the prices have been kept unchanged, the reason being its prices are already much higher than north region. With this hike, cement prices in north region stands at average of Rs505-525 per bag.
Mohammad Ali Tabba, Chief Executive Officer of the Lucky Cement Limited, when contacted said, “Since start of March 2020, and after approval of the Ordinance, cement demand has recovered up to 90 percent, and in the north region it has recovered full demand and has even achieved 10 percent more over the last year.”
Regarding the price hike, he said that since demand for cement had eroded in first two months (Jan-Feb), while at the same time, three manufacturers including our company had made expansion in their capacities, this pushed the prices to as low as Rs450/bag in north region from earlier Rs550 to 600/bag.
He said, “We cannot say it an increase in prices, but we can call it that the cement sector has reached up to its old price level from where it declined.” He said that the manufacturers have increased the prices in the range of Rs45 to 55/bag. Our company has increased the price by Rs50 in north region.
It is worth mentioning that there is a huge difference in the prices of cement in north and south regions. Average price in south is Rs650/bag, while in north region it is now around Rs505 t0 525/bag.
A cement dealer in Islamabad told The News that the senior companies’ representatives held the meeting and they have decided the price hike. He said that Fauji cement has increased its price by Rs45/bag while all other brands including Lucky Cement, Cherat Cement, DG Khan Cement and other producers in north region have increased the prices by Rs55/bag each. He said, “After this package, the demand for construction materials has increased.”
Are insecure property rights holding back Pakistan’s economy?
ReplyDeleteWe need to attempt to reform the institutions which govern us, better property rights might be a good place to start.
https://www.dawn.com/news/1457900
Let’s start with the basics. Property rights refer to an owners right to consume, use or even sell, barter, or gift, of an asset.
Think about this way: when you buy a plot of land, you acquire right to that property. You have the right to use it, build on it, exchange it for something else, sell it or gift it.
You can legally exclude other people from using your plot of land.
The same logic can be applied to intellectual property — if you come up with an idea, access to secure property rights would give you the ability to own that idea and benefit from it.
This has enormous benefits. It incentivises people to invest in the accumulation of assets — whether it is plots of land or ideas. Because these rights are tradable, they can be marketed and efficiently allocated within the economy.
Unreal estate: The boom in Gwadar’s property market
Consider a rather common anecdotal scenario which I have often heard a version of in Pakistan.
Imagine you own an undeveloped plot of land in the centre of Lahore. From your perspective, you want to sell the land to a buyer who has the capital to invest in it, but you cannot because your property rights aren’t secure. Perhaps the ownership over the land is contested and the courts have blocked its sale.
From the larger market perspective, that land acts as dead capital. It has an opportunity to be used for an economic activity, which would generate growth, but it cannot because the property rights are insecure.
When you drive around the centre of a bustling city like Lahore or Karachi and see some plots lying empty despite economic growth, it might be a reflection of insecure private property rights.
Going away from the analogy of plots, let’s briefly talk about something which is even more critical to economic development: ideas.
Ideas reflect innovation. If you come up with something new — perhaps a smartphone application or a new way of manufacturing something — and your ideas can be stolen, you have less incentive to spend time and energy in developing them.
In this way, lack of property rights ends up disincentivising innovation.
Copycat fashion: Can we police the line between imitation and inspiration?
In England, it has been argued, though with significant detractors, that the Glorious Revolution of 1688 led to the strengthening of private property rights. Due to the the monarch's shrinking power and the strengthening of the parliament, the state's power to expropriate property was reduced.
This security incentivised commercial expansion, with people theoretically more willing to invest, take the risk and acquire more assets.
It is hard to empirically prove that property rights were the most important determinant which led to this commercial expansion. However, it is likely that it is part of the story.
Even those who disagree that property rights were at the core of the Great Divergence and part of the growth story of many other countries since then, do not argue that secure, marketable private property rights are not conducive to economic growth.
This is more than reason enough for Pakistan to strongly consider how to strengthen private property rights.
How to establish secure property rights?
There are four interlinked features suggested which would allow such protection to emerge.
First, property rights need to be well-defined. This would deter the emergence of disputes and create a common stock of knowledge on who owns what.
For example, Pakistan's notorious patwari system is essentially a manifestation of badly-defined property rights.
The system empowers a person — a land record officer — to maintain large records of property owners. These officers are ill-famed for seeking bribes to grant the right to property, creating unnecessary costs.
#Steel bars get pricier amid #construction boom in #Pakistan. Price hikes came at a time when #economic activities worth Rs1 trillion & Rs100 billion had been generated in Punjab & Khyber Pakhtunkhwa, respectively, in housing and construction projects. https://www.dawn.com/news/1593040
ReplyDeleteManufacturers of quality steel bars increased their prices by up to Rs3,000 per tonne in November on the back of rising raw material costs in world markets and growing strength of the rupee against the dollar.
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On Friday, Prime Minister Imran Khan was informed in a meeting of the National Coordination Committee on Housing Construction and Development that 6,000 apartments would be constructed in Karachi under a project called Pakistan Quarters. In the first phase, work would start on 700 residential units at a cost of Rs4 billion over the next three months.
Another meeting on the Karachi Transformation Plan (KTP) presided over by the premier was informed that more than 100 projects worth Rs1.1 trillion have been planned under the programme.
Mughal Iron and Steel Industries Chief Operating Officer Shakeel Ahmed said the company pushed up the price of good quality steel bars by Rs3,000 per tonne in November to Rs114,500-115,000 per tonne.
Ruling out the possibility of increasing the price of long-steel product to cash in on the rising demand in the northern areas owing to construction activities, he said raw material prices have risen to $370 per tonne from $330 per tonne in the last one month. It happened due to various reasons like port congestion and the fear of further lockdowns in world markets.
The management of Mughal Iron and Steel Industries had informed analysts of brokerage houses that the Naya Pakistan Housing Programme (NPHP) can potentially create 6-7m tonnes demand for long steel assuming the government builds 50 per cent of the promised houses.
The company views future demand to come from the China-Pakistan Economic Corridor (CPEC) and the five hydro dam projects. It has already won a contract for three dams. It estimates steel demand of 350,000 tonnes from Bhasha Dam and 250,000 tonnes from Mohmand Dam in the first phase.
Razaque Steels Managing Director Irshad Mowjee, who also serves as general secretary of the National Steel Advisory Council (NSAC), said his company has increased the price by Rs3,000 on two kinds of quality steel bars, which now cost Rs111,500 and Rs116,500 per tonne.
Shredded scrap prices in world markets have risen due to lockdowns in Europe and the United States. The supply of scrap has become scarce, resulting in a hike in international prices. Yards do not have materials and the incoming supply is limited, resulting in the prices going up by $40 per tonne within the last three weeks, he added.
Fearing a further increase in steel bar prices if scrap rates do not come down, he suggested that the regulatory duty on raw materials should be abolished. The duty is not justified on raw materials used in a basic industry as industrialisation is the government’s top priority.
If it is not removed, it will affect the viability of CPEC projects. Cost overruns will happen as steel is a major component, he said.
Mr Mowjee urged the government to remove the additional customs duty of 2pc as competing raw materials are exempted from it. At present, the incidence of tax is around Rs23,000 per tonne, which needs to be reduced, he added.
Shredded scrap is used for manufacturing good quality bars for infrastructure projects. Increasing prices will affect the viability of CPEC projects, he said.
Gadani supplies ship plates that are used as raw material for lower-quality steel bars. Their prices have not increased, thus making bars made from steel billets uncompetitive. This may cause a drop in the production of good quality bars for infrastructure projects, he said.
Pakistan’s cement production capacity to increase to 99Mt/yr
ReplyDeletehttps://www.globalcement.com/news/item/12381-pakistan-s-cement-production-capacity-to-increase-to-99mt-yr
The All Pakistan Cement Manufacturers Association (APCMA) says that the country’s installed cement production capacity will reach 99Mt/yr within the next few years, with most of the planned work to be completed by mid-2023. The Dawn newspaper has reported that producers are launching new cement plant projects and expanding existing plants with a total new capacity of 18Mt/yr. Upon completion, the current projects will increase domestic cement production capacity by 43% to 99Mt/yr from 69Mt/yr. 94Mt/yr of the new capacity is situated in Northern Pakistan and 5.0Mt/yr in Southern Pakistan.
APCMA says that the reason behind the new expansion cycle is estimated annual sales growth of 10 – 15% from 2021.
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Cement makers to expand production capacity by 40pc
https://www.dawn.com/news/1622795
Pakistan’s cement producers plan to expand their capacity by more than 40 per cent from nearly 69 million tonnes to nearly 99m tonnes over the next several years in anticipation of 10-15pc growth in their sales every year, claims an All Pakistan Cement Manufacturers Association (APCMA) official.
Speaking with Dawn, the APCMA official, who requested anonymity, said almost every cement manufacturer had planned to increase their production capacity through greenfield and brownfield projects. Many projects, especially the brownfield ones, are expected to come on line in the next two years, adding nearly 18m tonnes to the existing capacity.
“Almost 95pc of the new capacity is being planned in the north – mostly in Punjab – where the most growth in demand is coming,” he said.
According to him, the industry was of the view that cement sales will spike as construction activity picks up further going forward on the back of a generous housing package announced last year by the prime minister to help the economy to recover from the Covid-19 pandemic impact. The announcement of mega infrastructure schemes and resumption of work on CPEC related projects and dams too are driving the industry sentiment.
The massive reduction of 625bps in the central bank’s policy rate from 13.25pc to 7pc during March and June last year to offset the impact of the Covid-19 pandemic as well as the availability of cheaper long-term financing for new and old projects under the Temporary Economic Refinance Facility (TERF) initiative, which has diluted the borrowing cost of the industry across different sectors, have also contributed to the cement producers’ decision to undertake expansions.
Most cement makers have already disclosed their expansion plans through bourse filings over the last few months.
The new investments represent the fourth expansion cycle by the cement industry.
Cement dispatches have consistently been rising since the resumption of economic activities last summer ever since the Covid-19 curbs on the construction industry, and other businesses, were lifted. Total cement dispatches – domestic and exports both – jumped 19pc to 48.3m tonnes during the period between July and April from 40.5m tonnes a year ago. Domestic sales are up by almost 19pc to 40.2m tonnes and exports by about 20pc to 8m tonnes.
#Pakistan #cement consumption grows by 13% in June to 5.211 million tons from 4.623Mt in June 2020. Cement sales jumped 20% to 48.119Mt in 11MFY21 from 39.96Mt from 11MFY20. #ImranKhan's #NayaPakistan Housing & PSDP allocation boosted #construction.
ReplyDeletehttps://www.cemnet.com/News/story/171040/pakistan-cement-dispatches-grow-by-13-in-june.html#.YOOU7jXORVQ.twitter
Pakistan’s cement sector posted a robust YoY growth of 12.73 per cent in June 2021, as total dispatches rose to 5.211Mt against 4.623Mt in June 2020. Cement dispatches rose by 20.40 per cent to 48.119Mt in 11MFY21 from 39.96Mt during the eleven months of the last financial year 2019-20, according to data released by the All Pakistan Cement Manufacturers Association (APCMA).
The rise is attributed to construction activities under the Naya Pakistan Housing Scheme (NPHS), vital government initiatives, and in anticipation of higher Public Sector Development Program (PSDP) allocation for the year 2021-22.
Intermarket Securities Ltd also supported the same growth sentiment and argued that the construction sector will remain in the limelight as cement dispatches continue to grow on the back of a normalisation of construction activities. This has been led by the relief package announced by the government coupled with progress on the NPHS.
An APCMA spokesman said that FY20-21 had been a good year for cement, as demand has grown considerably. The cement industry is expanding its capacity from 70Mt to around 100Mt. The expectation is that the market will increase by 15 per cent annually for the next three years due to an increase in projects funded by the PSDP and China-Pakistan Economic Corridor (CPEC), as well as expanding housing and industrial demand.
Export
According to APCMA, exports also increased from 7.847Mt during the financial year 2019-20 to 9.314Mt during the outgoing financial year 2020-21, showing a growth of 18.69 per cent. Pakistan usually exports cement overland to Afghanistan and by sea to the Middle East, Africa, and South and Central Asia.
#Pakistan #cement industry's total capacity is currently at 69 million tons, and a further 18 million tons of capacity is in the pipeline. This will take total production capacity to 87 million tons by FY24. #construction #infrastructure #housing #economy https://www.cemnet.com/News/story/171425/pakistan-is-entering-a-new-cement-capacity-expansion-phase.html
ReplyDeleteIn a cement conference, conducted by AKD Securities Ltd CEO, Muhammad Farid Alam, on 15 September 2021, Pakistan's cement industry producers confirmed that the country has entered another expansion phase. The total installed capacity of the cement industry in Pakistan is currently at 69Mta, and a further 18Mta of capacity is in the pipeline. This will take total production capacity to 87Mta by FY24.
Atif Kaludi, CFO of Lucky Cement Ltd, Muhammad Rehan, CFO at Attock Cement Pakistan Ltd, Shamail Javed, CFO at Gharibwal Cement Ltd, and Inayatullah Niazi, CFO at DG Khan Cement Ltd verified that the next expansion phase was imminent.
In FY21 Pakistan's cement sales grew by 20 per cent YoY to 57.4Mt. For FY22 experts expect demand to grow by 10 per cent YoY. They estimated that if demand continues to increase by 10 per cent each year, the industry will reach 100 per cent capacity utilisation by FY26.
Lucky Cement
Lucky will incur capex of PKR23bn (US$136.99m) for its upcoming cement expansion, of which approximately 50 per cent is funded through Temporary Economic Relief Financing (TERF) and Long Term Financing Facility (LTFF) facilities. The development is expected to commence operations by December 2022, Atif Kaludi added.
Attock Cement
Cement expansion of 4250tpd is expected to come online by January 2024. Similarly, a solar plant of 20MW is expected to go online by October 2021, said Muhammad Rehan.
Garibwal Cement
According to Shamail Javed, GWLC's announced expansion is subject to board approval. If the board approves, it will take two years to start commercial production.
DG Khan Cement
The company is expected to start construction of a project from next year. The 10,000-14,000tpd is expected to come online by FY25. The total cost of the project is expected to be US$250m and will be financed through a combination of debt and equity, said Inayatullah Niazi.
#Pakistan domestic #cement sales during August 2021 increased to 3.814 million tons from 2.805 million tons in August 2020, showing a healthy increase of 35.98%. #construction #infrastructure #housing https://tribune.com.pk/story/2318570/cement-sales-surge-228-in-august
ReplyDeleteThe cement sector posted a growth of 22.77% in August 2021 as total cement dispatches were recorded at 4.336 million tons against 3.531 million tons in the same month of previous year.
According to data released by the All Pakistan Cement Manufacturers Association (APCMA), local cement sales during August 2021 increased to 3.814 million tons from 2.805 million tons in August 2020, showing a healthy increase of 35.98%.
Exports, however, continued to decline as the volumes fell from 726,687 tons in August 2020 to 521,468 tons in August 2021, decreasing by 28.24%.
During August 2021, the north-based cement mills dispatched 3.141 million tons to domestic markets, an increase of 25.42% over 2.504 million tons in August 2020.
South-based mills dispatched 673,572 tons of cement to local markets during August 2021, registering a robust increase of almost 124% compared to sales of 300,750 tons in August 2020.
Exports from north-based mills declined 33.14% as shipments dropped from 212,076 tons in August 2020 to 141,804 tons in August 2021. Exports from south decreased 26.22% to 379,664 tons in August 2021 from 514,611 tons in the same month of last year.
Read Cement, steel price hike worries construction sector
During the first two months of current fiscal year, total cement dispatches (domestic and overseas) were 8.235 million tons, which were 1.61% lower than the 8.37 million tons dispatched during the corresponding period of last fiscal year.
North-based mills sold 6.033 million tons of cement in domestic markets during the first two months of current fiscal year, showing a slight increase of 1.57% than the dispatches of 5.939 million tons during July-August 2020.
Exports from north declined by 17.16% to 277,422 tons during July-August 2021 compared with 334,899 tons exported during the same period of last year.
Domestic dispatches by south-based mills during July-August 2021 were 1.228 million tons, showing a healthy increase of 50.01% over 818,600 tons dispatched during the same period of last fiscal year.
There was, however, a massive decline of around 45% in exports from the south zone as the volumes reduced to 696,823 tons in the first two months of current fiscal year from over 1.277 million tons during the corresponding period of last fiscal year.
An APCMA spokesperson said that the landed price of coal, a major input for the cement mills, which cost around Rs18,000 per ton in August 2018 has increased multiple times since then and the current landed cost comes to around Rs31,500 per ton, increasing the cost of production by approximately Rs90 per bag.
Similarly, the electricity rate, which was Rs11.68 per unit in August 2018, is now Rs19.40 per unit. This has impacted the cost of production by around Rs35 per bag.
Read more Tarin stresses need for cut in cement prices
Other input costs like packing material, provincial taxes on raw material and fuel prices have also gone up, which has increased the overall cost of production.
He emphasised that the current demand for imported coal from the cement sector is around 8.120 million tons but there is only one terminal in the country to handle all coal shipments.
Due to this, the cement industry is continuously facing delays in unloading coal shipments, resultantly paying demurrages and incurring extra costs on its operations.
#Pakistan #cement production has grown from 35 million metric tons in 2015 to 55 million metric tons in 2021. #CPEC #NayaPakistan #housing #infrastructure #construction #exports https://www.globalcement.com/news/item/13839-update-on-pakistan-march-2022
ReplyDeletehttps://twitter.com/haqsmusings/status/1504176499032616960?s=20&t=bRjXPJL-GLBVBoMhFkJVwA
Update on Pakistan, March 2022 - Cement industry news from Global Cement
https://www.globalcement.com/news/item/13839-update-on-pakistan-march-2022
(Graph in the article shows Pakistan cement production growth from 35 million tons in 2015 to 55 million tons in 2021)
Data from the All Pakistan Cement Manufacturers Association (APCMA) shows that cement despatches have been steadily growing since the mid-2010s with a blip in 2020 caused by the start of the Covid-19 pandemic. The upward trend has been driven by local sales. Exports have generally grown at the same time, with more variance, but they are yet to regain the high of nearly 11Mt reported in 2009. On a rolling annual basis, local sales have remained steady since mid-2021 but exports have been slowly falling. In April 2021 they were 9.17Mt but by February 2022 they were 7.33Mt. For the February 2022 figures APCMA blamed this on the growing cost of production, rising international freight rates, mounting coal prices and a trade ban with India. On that last point for example, Pakistan-based producers exported 1.21Mt of cement to India in the 2017 – 2018 financial year before exports stopped after February 2019. Despite a brief respite in the spring of 2021 talks are still ongoing to resume trade with India.
On the corporate side the country’s largest cement producer by capacity, Lucky Cement, drew the same conclusion as the APCMA with its half-year results to 31 December 2021. Its local sales volumes were down a little but its exports were down a lot. It noted that the reason its local sales were falling but national industry local sales were up slightly was due to some competitor plants being non-operational in the previous year. However, the company managed to keep sales revenue and earnings increasing year-on-year by successfully combating growing input costs with price rises. Bestway Cement, the country’s other large producer, reported a tougher situation in the second half of 2021, with both local sales and export volumes down. This was attributed to a boom in construction activity in the second half of 2020 as Covid-19 lockdowns were eased. Demand for cement since then was said to be ‘sluggish’ due to inflation and high commodity prices. It also pinned its marked fall in exports on political and economic instability in Afghanistan. However, turnover and operating profit were both up due to higher selling prices.
Elsewhere in the sector news since the start of 2021, Pakistan’s exports to South Africa remained stymied in early 2020 due to a review of ongoing tariffs and the government decision to restrict infrastructure projects to only using locally produced cement. On the sustainability front the APCMA started to set out its decarbonisation strategy in November 2021. It may have a long way to go given that a think tank reported earlier in the year that the cement sector was the largest emitter of coal-related CO2 emissions in the country, even more than power generation. Alongside this plenty of capacity additions have been announced. Lucky Cement started commercial cement production at its 1.2Mt/yr integrated Samawah cement plant in March 2021. Various new cement plants and upgrades to existing plants have been proposed by Bestway Cement, Cherat Cement, Fauji Cement, Kohat Cement Company, Lucky Cement and Maple Leaf Cement. Finally of note to a sector troubled by energy prices, in September 2021 the Pakistan International Bulk Terminal said it was going to upgrade its coal handling capacity to around 17Mt/yr by 2024.
Pakistan - Operational Design for the Project Development Fund and for the Viability Gap Fund
ReplyDeletehttps://openknowledge.worldbank.org/handle/10986/12391
This final report is the fifth deliverable for the World Bank funded project 'operational design for the project development fund and for the viability gap fund'. Taking into account feedback and further consideration of issues rose in the previous Reports, it aims to: provide high level recommendations on the overall Public Private Partnership (PPP) framework in Pakistan, recognizing international best practice but also taking into account the specific Pakistan context and the challenges faced their-in; provide the analysis of the project pipeline for PPP projects in Pakistan, on the basis of consultations undertaken in Islamabad in May 2009; and design possible structures for the Project Development Fund (PDF) and for the Viability Gap Fund (VGF), that is informed by the current local enabling environment for PPPs, including the institutional capabilities and the existing pipeline of PPP projects. This final report incorporates feedback from the World Bank and the Government of Pakistan on each of the above-listed issues, which were set out and discussed in details in previous reports.
Pakistan allocates Rs800 billion for FY23 PSDP
ReplyDeleteJune 11, 2022
https://pkrevenue.com/pakistan-allocates-rs800-billion-for-fy23-psdp/
The country presented the federal budget 2022/2023, which envisages PSDP worth 800 billion rupees for the next fiscal year.
It has been centered on improvement in sectors such as water resources, transport and communication, energy, higher education, health, science and technology, and balanced regional development.
The emphasis of PSDP is also on revival of CPEC and related projects for inter-provincial and regional connectivity with equal importance to Special Economic Zones to promote trade, industrialization and create job opportunities.
The major thrust in the Information and Communication Technology sector including establishment and operations of Special Technology Zones.
Under the PSDP, the government has allocated 44.179 billion rupees including foreign aid of 1.3 billion rupees to the Higher Education Commission for implementation of 151 development projects.
The allocation indicates an increase of one hundred percent over the last year.
An allocation of over 197 billion rupees has been made for 117 power related projects.
These include hydro power generation projects such as Diamer-Bhasha, Mohmand, Nai Gaj and the fifth extension of Tarbela. Initiatives like developing water storages, automatic telemetry system, rainwater harvesting, decreasing water losses, ground water regulation and management would be undertaken in consultation with the stakeholders.
Over nine billion rupees have been earmarked for Ten Billion Trees Tsunami Programme Phase-I to achieve the target of planting 500 million trees.
Similarly, over 563 million rupees and over 1.2 billion rupees have been allocated for installation of weather surveillance radars at Multan and Sukkur respectively.
The Federal PSDP has also proposed an amount of 1.5 billion rupees to complete the emergent nature of small flood schemes all over Pakistan.
An allocation of 227 billion rupees has been made for strengthening efficiency of transport and logistics for domestic commerce and regional connectivity.
The high impact infrastructure projects to be completed under Public Private Partnership mode include Sukkur-Hyderabad Motorway, Sialkot-Kharian Motorway, Kharian-Rawalpindi Motorway, and Karachi Circular Railway. Under the CPEC, D I Khan-Zhob section is under discussion with the Chinese side for financing and it is expected to be launched in the next financial year.
The concessional financing agreement for landmark ML-1 project is to be finalized in the second quarter of the next fiscal year and subsequently arrangements will be made for groundbreaking of the project.
A comprehensive National Action Plan for agriculture modernization has been prepared in terms of capacity building, agricultural product processing technology extension, fishery science and technology, aquaculture and aquatic products processing.
Cement production & sales in FY 2021-22
ReplyDeletehttps://www.finance.gov.pk/survey/chapter_22/PES03-MANUFACTURING.pdf
Total local dispatches during July-March FY2022 slightly decreased by 0.03 percent to
36.17 mt from 36.18 mt last year. While, total exports clocked in at 4.64 mt (-35.04
percent) against 7.15 mt during the same period last year. Local dispatches from the
northern region decreased by 2.27 percent, while southern region dispatches surged by
12.3 percent. Exports from the north nosedived by 64.5 percent, while south witnessed
fall of 24.3 percent growth during the period.
Cumulative dispatches (local & exports) posted a decline of 5.8 percent and reached
40.82 mt during July-March FY2022 against 43.32 mt in the corresponding period.
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Table 3.9: Cement Production Capacity & Dispatches (Million Tonnes)
Years Production
Capacity
Capacity
Utilization (%)
Local
Dispatches
Exports Total
Dispatches
2006-07 30.50 79.23 21.03 3.23 24.26
2007-08 37.68 80.14 22.58 7.72 30.30
2008-09 42.28 74.05 20.33 10.98 31.31
2009-10 45.34 75.46 23.57 10.65 34.22
2010-11 42.37 74.17 22.00 9.43 31.43
2011-12 44.64 72.83 23.95 8.57 32.52
2012-13 44.64 74.89 25.06 8.37 33.43
2013-14 44.64 76.79 26.15 8.14 34.28
2014-15 45.62 77.60 28.20 7.20 35.40
2015-16 45.62 85.21 33.00 5.87 38.87
2016-17 46.39 86.90 35.65 4.66 40.32
2017-18 48.66 94.31 41.15 4.75 45.89
2018-19 59.74 78.48 40.34 6.54 46.88
2019-20 63.63 75.14 39.97 7.85 47.81
2020-21 69.26 82.93 48.12 9.31 57.43
July-March
2020-21 69.26 83.41 36.18 7.15 43.32
2021-22 51.94 78.58 36.17 4.64 40.82
Source: All Pakistan Cement Manufacturers Association (APCMA)
3.5 Small and Medium Enterprises
Small and Medium Enterprises (SMEs) are indispensable to the progress of the nation as
it contributes significantly to the economic and social development of the country in a
myriad way: create employment opportunities, foster human resource development and
stimulate value addition to the economy.
To support SMEs to play their due role in economic development, Small and Medium
Enterprises Development Authority (SMEDA) has taken various initiatives.
Faseeh Mangi
ReplyDelete@FaseehMangi
Pakistan’s 🇵🇰 D.G. Khan to Export Cement to U.S. for the First Time
The cement maker is in process to ship 50,000 tons of the building material to the US 🚢
https://twitter.com/FaseehMangi/status/1536770084437430273?s=20&t=VFvJN3p97vaPwA5DxNz6XQ
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In a first: Pakistan's D.G. Khan to export cement to US: report
Ship is being loaded at Karachi port for delivery to Houston, says CFO
https://www.brecorder.com/news/40180013
D.G. Khan Cement Company is in process to ship 50,000 tons of cement to the US, reported Bloomberg on Tuesday, a welcome development for Pakistan that is desperately seeking an increase in exports in the face of a widening trade deficit that has pushed the rupee to record lows.
Company CFO Inayat Ullah Niazi stated that a ship was currently loading cement at a port in Karachi for delivery to Houston, added the report.
The development comes at a time when the country's exports registered negative growth of 10.22% on a monthly basis in May 2022, clocking in at $2.6 billion from $2.897 billion in April 2022, according to latest figures released by the Pakistan Bureau of Statistics (PBS).
D.G. Khan Cement, one of Pakistan's largest cement makers, posted a 26% higher profit during the nine-month period that ended March 31, 2022 with earnings amounting to Rs4.1 billion. The company had posted earnings of Rs3.25 billion in the same period of 2020-21.
In 2020, DG Khan Cement won orders for export of cement to the Philippines.
Meanwhile, in a report published earlier, JS Global analyst Muhammad Waqas Ghani stated that continuously rising coal prices and rupee depreciation have led to the procurement of coal at higher rates by cement manufacturers, requiring them to raise domestic prices by Rs40 per bag during the last few weeks.
With an almost 50% (Rs300 per bag) increase in the last 12 months, further price increments would be needed to neutralise the coal cost impact, if prices remain elevated, added Ghani.
"If coal prices stay at these high levels, 4QFY22 profitability will likely be impacted given higher average cost of coal inventory."
NHA gears up to link CPEC M-14 with Pakistan-Afghanistan border
ReplyDeletehttps://www.pakistantoday.com.pk/2022/07/05/nha-gears-up-to-link-cpec-m-14-with-pak-afghan-border/
ISLAMABAD: The federal government has decided to connect Ghulam Khan in North Waziristan with Motorway 14 (M-14), a project of the western alignment route of China-Pakistan Economic Corridor (CPEC) via a 184km-long Motorway.
According to Gwadar Pro on Tuesday, the National Highway Authority (NHA) on Monday issued a request for proposal (RFP) of consultancy services for the Feasibility Study and Detailed Design for the Construction of the Motorway from Ghulam Khan to Esa Khel Interchange (184km approx).
The project will be financed by the Federal Government through PSDP 2022-23 through separate head/allocation.
In this regard, a pre-proposal conference on the project will be held on July 19, 2022, at NHA headquarters in Islamabad while procurement will be carried out by adopting the “Single Stage Two Envelops” procedure.
The proposals complete in all respects in accordance with the instructions provided in the RFP document in sealed envelopes, which should reach on or before August 10, 2022.
Esa Khel Interchange is located over M-14 in Mianwali district of Punjab, which is in proximity to the Lakki Marwat district of Khyber Pakhtunkhwa (KP). Between Mianwali and Ghulam Khan falls Bannu district of KP. After Torkham and Chaman, Ghulam Khan is the third most important crossing between Pakistan and Afghanistan.
Afghanistan has already started benefiting from Gwadar Port and the country received the first consignment of bulk cargo from the United Arab Emirates in July 2020. Ghulam Khan crossing, at the Pak-Afghan border point, is the shortest route connecting CPEC’s western route with Afghanistan, Central Asian States and beyond.
Pakistan: Domestic cement sales declined by 4.6% to 38.2Mt in FY2024 from 40Mt in FY2023, reflecting a slowdown in construction activities. Despite this, exports were up by 56% to 7.1Mt, contributing to a slight overall rise in cement dispatches of 1.6% to 45.3Mt in 2024, according to Dawn newspaper.
ReplyDeletehttps://www.globalcement.com/news/item/17555-cement-sales-fall-in-pakistan#:~:text=Pakistan%3A%20Domestic%20cement%20sales%20declined,2024%2C%20according%20to%20Dawn%20newspaper.
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Pakistan: Cement Sector Profitability To Improve – OpEd
July 22, 2024 0 Comments
By Shabbir H. Kazmi
https://www.eurasiareview.com/22072024-pakistan-cement-sector-profitability-to-improve-oped/
According to Topline Securities, its cement universe is expected to post profit of PKR12.5 billion for 4QFY24 as against a profit of PKR11.1 billion for 3QFY24, up by 13%QoQ, due to higher average retention prices.
This will take FY24 profits to PKR51.1 billion, up 84%YoY due to increase in GP margins to 29%.
While on YoY basis, Topline cement universe posted loss of PKR2.8 billion in 4QFY23 due to higher effective tax rate related to super tax liability. Excluding for tax implications, Profit Before Tax (PBT) in 4QFY24 is expected to increase by 45% YoY due to higher revenues and other income.
Net sales are anticipated to grow by 10%YoY to PKR91.3 billion in 4QFY24 despite 7%YoY decline in local cement sales, thanks to 11%YoY increase in average local cement prices.
Decline in cement dispatches in 4QFY24 was due to: 1) lower working days amid Eid holidays, 2) high cost of construction, and 3) lower demand due to economic slowdown.
Capacity utilization of the cement sector clocked in at 52% in 4QFY24, as compared to 55% in 4QFY23
Gross margin of the sector are anticipated to improve by 1%YoY to 27% in 4QFY24 due to higher retention prices.
During the 4QFY24, cement players in the South region mostly relied on Richards Bay coal, while those in the North region used a combination of Afghan and local coal. Richards Bay coal prices averaged at US$108 per ton in 4QFY24 as compared to US$109 per ton in 4QFY23 and US$97 per ton in 3QFY24, down 1% YoY and up 11% QoQ.
Average retention price for 4QFY24 is estimated at PKR914/bag, up 11% YoY and 2%QoQ.
Other income of the sector is estimated to rise to PKR5.6 billion in 4QFY24, up by 44%YoY.
LUCK is expected to contribute 60% in sector’s other income.
The brokerage house has an Overweight stance on Pakistan Cement sector with Luck Cement (LUCK), Maple Leaf Cement (MLCF) and Fauji Cement Company (FCCL).