Saturday, February 27, 2021

Construction and Manufacturing Driving Double-Digit Growth in Pakistan Cement and Steel Production

Pakistan steel production grew by 13.3% in 2020,  the second fastest among the top 40 steel producing countries, according to data published by the World Steel Association. At the same time, Pakistan Bureau of Statistics revealed that the nation's steel imports rose by 18% year-over-year. The demand for steel was driven by construction and manufacturing sectors which are leading Pakistan's economic recovery. 

World Steel Production. Source: World Steel Association

Pakistan steel-makers produced 3.7 million tons of steel in 2020, up 13.2% from 3.2 million tons in 2019. Neighboring India saw 10.6% decline in steel production in the same period. Global steel production declined 0.9% in 2020. Pakistan also imported $2.1 billion worth of iron, steel and scrap in the first 7 months (July 2020- January 2021) of the current fiscal year.  It's a jump of 18% from the same period in prior fiscal year.  Pakistan steel industry reached peak production of 5 million tons in 2017 before declining to 4.7 million tons in 2018 and 3.3 million tons in 2019. 

Construction boom helped Pakistan grow its domestic cement consumption by 17% in the first 7 months (July 2020-January 2021) of the current fiscal year. Domestic cement sales rose to 27.65 million tons in this period, while exports grew by 10.23% to 5.71million tons from 5.186 million tons in the same period last year.  The total cement sales (local and exports) were 33.36 million tons,  up 15.77% over the corresponding period of the last fiscal year.  

Related Links: 

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South Asia Investor Review

Pakistan to Become World's 6th Largest Cement Producer By 2030

Naya Pakistan Housing Program

Pakistan's Response to COVID19 Pandemic

Pakistan Tech Exports

Pakistan Digital Economy Surged 69% Amid Covid19 Pandemic

Soaring Food Prices Hurting Pakistanis

Najam Sethi on Desperation in PDM Ranks

India's Firehose of Falsehoods Against Pakistan

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Riaz Haq's Youtube Channel

PakAlumni Social Network


Riaz Haq said...

Economic indicators, social spending on upward trajectory

The Pakistan Tehreek-i-Insaaf (PTI) government has started yielding results in the form of improved economic indicators which was providing necessary cushion to further strengthen the social safety nets.

The government managed to put the economy back on track by introducing financial discipline and taking politically tough and unpopular decisions. “Putting the economic indicators back on the positive trajectory was a herculean task for the present government as it inherited an economy with a major balance of payment crisis which led to high inflation and low growth,” said a press release issued on Monday.

The Large Scale Manufacturing (LSM) has shown significant growth so far in the current fiscal year. The LSM grew by 7.4 percent in October and 14.5 percent in November which was the highest monthly growth in twelve years. The manufacturing recovery was also becoming broader with 12 out of 15 sub sectors registering positive growth leading to employment generation, officials say.

The incentives given to the industries including the construction sector have triggered an economic activity in the country, it said. It further said that with the industries operating at its full capacity, there has been a significant increase in the exports and the exports reached to $2.3 billion in December 2020, highest in seven years.

The exports of textile industry, it added went up by US $1.4 billion in December 2020, thus achieving the highest ever growth for any month and cement sale witnessed highest ever sale in October 2020.

Regardless of debt servicing of about US $10 billion annually, the foreign exchange reserves have reached about US $ 20 billion, highest since January 2018.

It further said that commercial bank deposits have witnessed highest growth in eighteen years. The current account has shown a surplus of US $1.6 billion during first five months of current financial year against a deficit of $1.7 billion in the corresponding period last year.

There has also been the lowest rise in the external debt in the financial year 2020 and that the loans taken by the present government were used to retire the ones taken by the previous governments.

“Pakistan’s improved ranking in the Ease of Doing Business index and the steps taken to facilitate the investors will also attract both foreign and domestic investments,” it said adding that apart from bringing improvement in economy, the government was also focusing to provide relief to the disadvantaged segments of the society.”

The budget of Ehsaas program has been doubled if compared with that of the year 2018. The cash assistance provided to millions of deserving families in most transparent manner in the wake of Covid-19 outbreak helped to protect and mitigate the sufferings of vulnerable segments of society.

Similarly, the Sehat Sahulat Cards scheme was being implemented on fast track basis both in Punjab and Khyber Pakhtunkhwa provinces which will bring a visible change in the lives of the people.

samir sardana said...

The real story is that if Pakistanis have captive coal,lime,gypsum,limestone and ports then they could be the best and lowest cost cement producers in Asia.Lucky Cement had a turnover of Rs. 17000 crores (Consol) in FY 2019 and ACC (in India),had the same amount (on a consol basis),which is just double on PPP

The lesson is in history.All that people come to see in Hindoosthan is made by the Mughals (Taj Mahal,Red Fort.....) All things made by the Hindoos are in ruins.Construction, Architecture and Beauty comes naturally,to the Mughals.The Mughals have created models of beauty,in a sewer of filth (which Indians refuse to acknowledge).

So Construction and Cement comes naturally to the Mughals,and Pakistan is the Intersection of the Mughal,Central Asian,Persian,Turk and Arab DNA

The Operating profit of Lucky cement is 14% of Net Sales and that of ACC is around 10%.The technical and management expertise of the Pakistan N programme,is reflected in the Pakistan Cement Industry - as the Cement sector,is the only sector,where Pakistan has an integrated supply chain - from mines to power to ports.

This Management expertise can be leveraged in Cement plants,in the GCC and North Africa,to acquire or operate cement plants on tolling contracts - as also,get into the IPP business. In several nations and markets in the GCC and North Africa,there is no raw material or its mining is unviable - and thus,Pakistan cement companies can establish low cost centres of
mining,in different or relevant geographies,and low cost manufacturing centres of clinker - to feed the manufacturing units in the GCC.The comfort of the Pakistani State with the Arabs,makes the Pakistani cement companies,the only option.

Thereafter,the Consolidated Balance sheets,of the Pakistan cement companies,can be used,to restructure debt and lower its cost of debt,as also,raise funding for new and innovative businesses,in the contruction material value chain.dindooohindoo

The Crux is that,with the same resources,the Pakistani management and technical synthesis, is BETTER than the Dindoos of India.That same model,has to be applied to the Pakistani strategem, in Kashmir.In military matters,you need "requisite resources",and not the "same resources".A 150 USD (Marginal Cost in Pakistani Ordinance Factories) Anti Tank missile can destroy a Rs 30 crore tank.

Anonymous said...

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This vaccine has proved to be technically superior to oxford vaccine.

It is also effective against all mutant strains.

This is not all check out worlds first dna vaccine developed by Zycus Cadilla of India presently in Phase 3 trials.

It us even more advanced than mRNA vaccines.

If you were a sentient people you would treat this as a sputnik moment and try to figure out how exactly India can do what no sunni muslim country can..but your not'll stay jealous and primitive..which suits us fine..

Riaz Haq said...

Tweet from Dr. Faheem Yunus:

Vaccine efficacy data is “published” — not announced

As to Muslims being primitive, all I can say is that the first modern mrna-based COVID vaccine was created and sold by BioNTech, a team led by a Turkish Muslim couple.

Also notable is the fact that the US Operation WARP Speed to expedite vaccine development was led by a Muslim.

samir sardana said...

The Steel story of Pakistan,is the path to economic evolution.The USP is Economic viability. If the steel value chain is viable,in Pakistan,w/o iron ore,and reliable and low cost power,and inspite of steel smuggling - then this is the path,to import substitution.

Take the case of Agha Steel (of Pakistan) and its DRHP - 1st the Pakistani state should offer,import duty protection to billets,from Chinese imports via ADD etc.That gives time for Agha Steel,to be viable,perfect the technical and management synthesis,and make money for the stock holders and its bankers - and then,you have a replicating success story(for the promoters, shareholders and bankers).This excludes for the moment, the downstream users of the billlets.

In stage 2,as the market for billets expands - the company expands futher and goes into more integration - which increases and improves profitability.This enables Agha to compete,in part,with Chinese imports,and so,the Pakistani state can lower import duties (which will also obviate smuggling)

The Import USD is obviated,and the money circulates in the nation,and provides INCREMNENTAL employment,to several people,as employees of entrepreneurs.

The economic cost of steel,is just the raw material cost - as the taxes and interest,is transfer pricing.The labour cost is also Nil as - w/o the billet manufacturing,they would be unemployed or underemployed.The impact of the multiplier on the expenditure of these marginally employed, in the steel sector,is another spinoff.If the material source is scrap, which has no salvage value for logistics or technical reasons,then the Economic Cost of the Steel,to the nation is ZERO.

In the import option - the entire CIF value is the financial and economic cost

The difference of the 2,is the Economic gain,and this gain can be parcelled by the state,to the entire steel supply and value chain,in terms of sops,duty cuts,import licences,tax concessions,freight subsidies etc,and to the non-steel sector - in terms of health and pollution costs.

The obviation of the import option - negates the FX shocks,when LCs are due for retirement or reimbursemnt or devolvement - and so,there is no bunching,of import remittances - which will kill the grey market in the USD.

This is the path to redemption and salvation for all Pakistani imports and manufacturing. Jiye Jiye Paistan ! And also free Kashmir from the yokels of the Indian worms.dindooohindoo

Riaz Haq said...

#Asian Dev Bank says #Pakistan holds potential for rapid #economic growth. ADB will support #infrastructure, #agribusiness, and #finance sector #investments to boost competitiveness and private sector development, create jobs and drive #market innovation.

“Under vision 2025, the country aims to achieve upper middle-income status and provide quality jobs to its growing labor force. But Pakistan has struggled with boom-and-bust cycles in previous years due to low export capacity, weak domestic revenue, and other systemic challenges,” ADB Country Director for Pakistan Xiaohong Yang said. “This has been exacerbated by the coronavirus disease (COVID-19) pandemic, which caused a sharp downturn in 2020 and is likely to push more people into poverty,” she said in an interview. “Pakistan has the potential to become a regional hub for trade and economic activity, but greater cooperation is impeded by weak connectivity and trade links.”

In response to the pandemic, ADB is taking major steps in providing critical finance for the government to implement its pro-poor fiscal and monetary policy, introducing best practice, building capacity, and sharing knowledge through close partnerships with all stakeholders. Manila-based lender financed and co-financed $2 billion loans to help Pakistan overcome the pandemic challenges. The ADB already endorsed a new country partnership strategy for 2021–2025, designed to help restore economic stability and growth.

Yang said ADB will deploy its sovereign and nonsovereign operations to support infrastructure, agribusiness, and finance sector investments. It will target reforms that boost competitiveness and private sector development, create jobs and drive market innovation. Recently issued local currency linked bonds will allow ADB non-sovereign operations to engage sectors like education, health and manufacturing. Yang said flagship projects such as the Turkmenistan–Afghanistan–Pakistan–India pipeline project and the Turkmenistan–Uzbekistan–Tajikistan–Afghanistan–Pakistan electricity project will contribute to Pakistan’s energy security. Sanitary and phytosanitary measures to promote agricultural trade will be improved and aligned with international standards. The country will also benefit from the development of regional and national tourism, as well as regional approaches to fighting pandemics.

ADB will seek to enhance productivity and well-being by improving education, nurtrition, health systems, clean water and sanitation, affordable housing, and social protection. ADB will promote system-wide reforms on skills development, and investments in secondary education with a special emphasis on increasing girls’ enrollment. The challenge of out-of-school children will also be addressed through support for Ehsaas Kafalat conditional cash transfers for primary education, targeting children, particularly girls, from poor and vulnerable households. ADB will also continue to support disaster risk reduction and management, including investments in irrigation infrastructure which will make Pakistan more resilient to water shortages, future flooding, and food security, said its country’s representative.

Riaz Haq said...

#Construction Boom in #Pakistan: #Cement sales soar 14% to 37.95 million tons in first 8 months of current fiscal year, up from from 33.31m tons in the same period last fiscal year. #Exports also grew 6.62% to 6.33m tons from 5.94m tons in 8MFY20. #COVID19

Overall cement sales posted a growth of 14 per cent to 37.95 million tonnes in 8MFY21 from 33.31m tonnes in the same period last fiscal year.

Local dispatches increased by 15.51pc to 31.62m tonnes in 8MFY21 from 27.37m tonnes in the same period last year. Exports also grew 6.62pc to 6.33m tonnes from 5.94m tonnes in 8MFY20.

As per data of the All Pakistan Cement Manufacturers Association (APCMA) released on Tuesday, North-based mills dispatched 26.82m tonnes for domestic consumption during 8MFY21, a jump of 15.29pc compared to the same period last year which was 23.26m tonnes. Exports from North were 1.63m tonnes, down by 9.83pc from 1.81m tonnes during the same period of last year.

South-based mills dispatched 4.79m tonnes in the domestic market during 8MFY21 which was 16.73pc higher than 4.11m tonnes dispatched during the corresponding period of last year. Exports from South were 4.70m tonnes, depicting a rise of 14pc over exports of 4.13m tonnes during the same period last year.

Rising cost of electricity and coal have led to increase in the cost of cement production, which is becoming difficult for the cement industry to absorb, a spokesperson for the APCMA said.

In February, cement sector showed 2pc growth to 4.577m tonnes as compared to 4.489m tonnes during Feb 2020.

Local cement dispatches in February witnessed a 6pc hike to 3.961m tonnes as compared to 3.735m tonnes in the same month of 2020. Exports continued a declining trend as seen during the last three months. Total exports dropped by 18.24pc from 753,444 tonnes in Feb 2020 to 616,030 tonnes in February.

During February, the North-based factories sold 3.28m tonnes locally, up by three per cent from 3.17m tonnes in Feb 2020, while sale of South-based mills stood at 683,384 tonnes for local consumption which was 21.49pc higher than 562,501 tonnes in Feb 2020.

Exports from North-based mills decreased by 7.71pc to 186,595 tonnes in February from 202,181 tonnes in Feb 2020 whereas the exports from South decreased by 22pc to 429,435 tonnes in February from 551,263 tonnes during the same month last year.

According to Topline Securities, cement prices averaged at Rs601 per 50kg bag in the Northern region while prices remained unchanged at Rs610-615 in the Southern region.

Riaz Haq said...

#Pakistani rupee enjoying smart recovery as #economy recovers. From a high of 168 against the #US dollar seen during the last year when pandemic started, the rupee has appreciated by 6.5% and is currently trading near 158 levels. #exports #remittances

Pakistan's rupee has staged a smart recovery against the US dollar on positive economic indicators, and experts believe it will continue its upward trend despite some challenges ahead.

Analysts and market experts said the currency will be a major beneficiary of higher GDP growth, rising foreign exchange reserves and consistent remittances inflows of over $2 billion during the first eight months of the current 2020-21 financial year.

The rupee has so far appreciated 1.7 per cent against the dollar this year and closed at 157.12 on the interbank market on Friday. Against the UAE dirham, it ended slightly up at 42.77 against 43.6 on January 8, reflecting an appreciation of 1.9 per cent.

“The Pakistani rupee has returned to stability chiefly due to higher remittances, debt relief on account of Covid-19 payment relief plan and economic rebound in the country,” experts said.

Latest central bank data indicates that Pakistan’s economy is expected to post 2.5 per cent GDP growth in the current fiscal year ending June 2021 after contracting 0.4 per cent last year as the government’s policy measures start yielding positive results.

The country registered a 24 per cent year-on-year increase in workers’ remittances to $16.5 billion during the July 2020-January 2021 period, while foreign exchange reserves rose to $20.13 billion during the week ended February 26 from $20.04 billion a week ago, according to the State Bank of Pakistan (SBP).

“The forex reserves held by the central bank increased $70 million to $12.978 billion due to the government’s official inflows. The foreign exchange reserves of commercial banks also increased to $7.155 billion from $7.132 billion,” the SBP said.

The central bank data also showed that Pakistan’s current account deficit shrank by 55 per cent on a year-on-year basis to $229 million in January from $512 million in the same month last year due to rising exports and higher remittances.

Devesh Mamtani, chief market strategist at Century Financial, said the rupee sustained an upward trend on account of positive economic indicators, but some challenges will keep the currency under pressure in 2021.

“From a high of 168 against the US dollar seen during the last year when pandemic started, the rupee has appreciated by 6.5 per cent and is currently trading near 158 levels. A wave of positive factors have helped the rupee to gain strength over the past year. This includes factors like resumption of the IMF’s [International Monetary Fund’s] $6 billion lending facility, narrowing of current account deficit and G20 lenders’ agreement for a second debt relief for Pakistani economy. The resumption of the IMF bailout programme is especially a huge win for the economy as had it been stalled last year owing to the pandemic,” Mamtani said.

Riaz Haq said...

Houses, flats for 1,500 Pakistani labourers under Naya Pakistan Housing project

It is very difficult for the salaried class, workers and laborers to construct or purchase a house in the cities due to soaring prices of land, Prime Minister Imran Khan said Thursday.

He was addressing a ceremony in Islamabad in connection with allotment of 1,500 houses and flats to the working class under the Naya Pakistan Housing programme.

The premier said the government has started the Naya Pakistan Housing project with a new mindset to provide support to these segments of society to own a house.

The ceremony started with a short speech by the PM's aide on Overseas Pakistanis Zulfi Bukhari, who said that in the first phase of this project completed by Workers Welfare Fund, 1008 flats and 500 houses have been constructed.

For the first time, workers and labourers are being provided with their own roof on mortgage basis, Minister for Communications and Postal Services Murad Saeed had said.

Under this scheme, houses will be distributed among widows and disabled, besides labourers on ownership rights to those who are earning less than Rs 0.5 million.

The premier said the government has introduced a legislation under which banks will provide loans on 5% interest rate for the construction of houses.

He said banks have promised to set aside Rs380 billion for this purpose.

Imran Khan said there is a boom in the construction industry due to the incentives given by the present government. He said this will not only lead to wealth creation but also provide job opportunities to the youth.

Riaz Haq said...

#Pakistan's current account #deficit falls 76% to $50m in Feb, from a deficit of $197m in Feb 2020, the 3rd consecutive month the current account has seen a deficit, after a surplus for 5 months in a row. #Exports rise 8% & #remittances jump 24%. #economy

The current account showed a surplus of $881 million during the first eight months of FY2021.

Pakistan’s current account deficit (CAD) for February declined 75 per cent year-on-year (YoY) and 76pc month-on-month (MoM) to $50 million, compared to a deficit of $197m in Feb 2020 and $210m last month.

This marks the third consecutive month the current account has recorded a deficit, after registering a surplus for five months in a row.

Overall, during the first eight months of FY21, the current account shows a surplus of $881m compared to a deficit of $2.74 billion in the corresponding period last year.

The narrowing of the deficit in February is largely attributable to continued strong growth in workers’ remittances and a sustained recovery in exports since November 2020, which more than offset the increase in imports due to domestic food shortages and recovering economic activity.

In February, the MoM improvement was due to a 45pc decline in primary income deficit, whereas the YoY improvement was attributable to 8pc and 24pc rise in total exports and remittances, respectively.

Total exports (goods and services) during the month jumped 3pc to $2.65bn compared to the $2.58bn logged in the previous month. Similarly, on a yearly basis, total exports witnessed an increase of 8pc in Feb 2021 against $2.46bn in Feb 2020.

In contrast, the combined imports of goods and services during the month under review grew 2pc to $5.184bn as opposed to $5.07bn recorded in January. On a yearly basis, overall imports of goods and services soared 17pc from $4.437bn in February last year.

This resulted in a trade deficit of $2.535bn in Feb 2021, up 1pc MoM and 28pc YoY.

Cumulatively, during 8MFY21, total exports stood at $19.87bn, shrinking 2pc YoY, whereas total imports grew 4pc YoY to $37.296bn, resulting in a trade deficit of $17.42bn, up 13pc YoY.

Workers' remittances by overseas Pakistanis registered a growth of 24pc YoY to $2.26bn during Feb 2021, while on a monthly basis they remained flat.

During the first eight months of FY 21, the continued healthy growth in inflows took the cumulative figure to a record level of $18.74bn, up 24pc YoY.

Riaz Haq said...

Pact signed to assemble European brand vehicle

The Lucky Motor Corporation (LMC), manufacturer and distributor of Kia vehicles, entered into a Licence and Technical Assistance Agreement this week with the Stellantis Group to assemble and distribute one of their European brands in Pakistan.

The Stellantis Group is the world’s fourth largest car group which was recently formed and it contains a portfolio of 14 international brands.

The LMC in mid-2019 had signed an MoU and expression of interest (EoI) with Groupe PSA which is now part of the Stellantis Group. Last year before achieving the manufacturing licence under the government’s new entrant policy, the LMC (then known as Kia Lucky Motors) had informed the government of its intentions to partner with Peugeot, a brand of the Stellantis Group.

Riaz Haq said...

#Pakistan selling US$ #bonds on global market for the first time since $2.5 billion were raised in 2017. New Pricing: $1 billion 5-year note at 6%. $1 billion 10-year note at 7.375%. $500 million 30-year bond at 8.875%. It follows #IMF deal resumption

Pakistan is selling a $2.5 billion dollar bond that will be a key test of investor sentiment after the resumption of a $6 billion bailout program with the International Monetary Fund.

The South Asian nation is offering the notes in three parts, people familiar with the matter said, asking not to be identified because they’re not authorized to speak about it.

The debt deal comes amid a flurry of developments in recent days, as Pakistan’s economy grapples with continued fallout from the pandemic. Prime Minister Imran Khan named a new finance minister on Monday, its third finance chief in less than three years. The IMF was set to release about $500 million to the country as the lender’s board completed certain reviews of a $6 billion bailout program, according to a statement last week.

Pricing for the offering is as follows, according to the people familiar:

The $1 billion five-year note will yield 6% after initial discussions of 6.25% area
The $1 billion 10-year note will yield 7.375% after initial discussions of 7.5% area
The $500 million 30-year bond will yield 8.875% after initial discussions of 8.875%-9%
Fair value is at high-5% for the five-year securities, low-7% for the 10-year portion and high-8% for the 30-year bond, according to Nicholas Yap, credit analyst at Nomura International (HK) Ltd.

The “bonds should see decent investor demand following a number of positive developments in the country of late” including the IMF loan resumption, Yap wrote in a report Tuesday.

The government plans an “international Sukuk transaction sometime after the Eurobond issuance,” the finance ministry said in a reply to questions last week. The country expected to raise more than $1.5 billion in global bonds if market conditions remained conducive, Muhammad Umar Zahid, director of debt at the ministry, said last month.

Credit markets have been busy this quarter, despite a run-up in rates in recent weeks. The Maldives, another non-investment grade sovereign borrower, sold a $200 million dollar five-year Sukuk security this week at 10.5%.

Pakistan is raising funds through the global market for the first time after pricing $2.5 billion of securities in 2017.

It’s doing so as the foreign exchange market sends more bullish signals.

Pakistan’s rupee has advanced to around its highest level against the dollar in nearly two years. It has gained about 4% so far in 2021, the only currency to strengthen against the dollar in Asia, according to a basket of currencies compiled by Bloomberg.

Riaz Haq said...

#Pakistan #Cement sales jump 44.4% in March to 5.773 million tons from 3.722 million tons in the same period last year with huge increase in domestic consumption and exports. Total cement sales in July20-March21 were 43.325m tons, up 17% from last year.

The cement sector posted the highest-ever monthly growth of 44.39 per cent in March at 5.773 million tonnes from 3.722m tonnes in the corresponding period last year due to a massive increase in domestic consumption and exports.

According to a local media report that compiled data released by the All Pakistan Cement Manufacturers Association (APCMA), local cement dispatches in March 2021 stood at 4.563m tonnes, up by 42pc compared to 3.214m tonnes in the same period last year whereas, exports surged by 60pc from 507,480 tonnes in March 2020 to 810,962 tonnes in March 2021.

During the month under review, cement mills in the North dispatched 3.809m tonnes to local markets against 2.749m tonnes in March 2020, up by 38.52pc. In March 2021, south-based mills dispatched 753,704 tonnes in domestic markets, which was 62.28pc higher than 464,440 tonnes in the same period last year.

Exports from North-based mills registered an enormous increase of 162.58pc as the volumes increased from 106,759 tonnes in March 2020 to 280,330 tonnes in March 2021.

Exports from the South rose by 32.42pc to 530,632 tonnes in March 2021 from 400,721 tonnes during the same month last year.

During the first nine months of the current fiscal year (9MFY21), total cement dispatches (domestic and exports) were 43.325m tonnes that was 17pc higher than 37.035m tonnes during the corresponding period of last fiscal year.

Riaz Haq said...

Federal Minister for Planning and Development Asad Umar said on Sunday afternoon said that Century Steel, a Chinese firm with an investment of US $240 million, would set up a steel mill in Rashakai Special Economic Zone (SEZ) which would produce about 1.5 million tons of steel.

Addressing the reception ceremony of the first consignment, carrying equipment and machinery for Century Steel at Karachi Port to set up a steel mill in the Rashakai SEZ, Umar said this occasion was another manifestation of exceptional relation between Pakistan and China.

He said the Chinese firm would also employ over 600 Pakistanis during the construction phase while in the second phase over 1000 people would be provided jobs.

According to an official statement, Umar said projects under China Pakistan Economic Corridor (CPEC) were progressing at a fast pace during the tenure of the incumbent government.

He informed that China Road and Bridge Corporation, (CRBC), a Chinese firm had entered into an agreement with Pakistan under CPEC to promote foreign investments for development and marketing in Rashakai SEZ.

He said the work for the provision of necessities including electricity and others at Rashakai SEZ was underway at a fast pace.

Asad Umar said CPEC was now entering into the most important second phase. The projects were now not limited to infrastructure only.

He said the bilateral relation between Pakistan and China was not new and whenever Pakistan needed a friend China was there.

Riaz Haq said...

Pakistan is striving to improve its ranking as the slowest for infrastructure expansion in the region, according to the World Bank, through a $2.4 billion government investment for highways, power and transportation this year.

The investment is in addition to billions of projects being funded by the World Bank, Asian Development Bank (ADB), Gulf Council Countries, JICA and the $56 billion China–Pakistan Economic Corridor (CPEC), which has been criticized for the high debt burden it will place on Pakistan.

Three metro projects are planned while several motorways and a revival of the circular rail in the port city of Karachi are also in the works. The Asian Infrastructure Investment Bank (AIIB) and the ADB have approved a $500 million loan to Pakistan for construction activity. Prime Minister Imran Khan’s has also announced a $30 billion plan to rehabilitate and develop the dying River Ravi into a perennial freshwater body. That project is being managed by Singapore’s Meinhardt Group.

But fundamental issues, such as safety, quality and contracting in the country, threaten to derail any progress, Said Mneimne senior vice president and managing director of Asia-Pacific for Hill International told ENR from Islamabad.

U.S. based Hill entered Pakistan’s real estate sector in 2017 as a project coordinator when it was awarded the $2.4 billion Crescent Bay 108-acre mixed-use development on reclaimed land at a seafront site about 12 miles from Karachi. Last year, the company was selected to provide construction consultancy services for the 2 million sq. m mixed-use development project called Elite Reverie, also known as Eighteen. The company is also pursuing opportunities in funded power and mass transit programs such as the Bus Rapid Transit in Karachi, Mneimne says.

“The consultant-contractor relationship in Pakistan, for example, is a tough one. Contractors treat themselves as labor demanding money every week instead of that laid out in the contract, or else threaten,” to leave, he said. “The concept of project management is not used here as the environment doesn’t justify it.”

Additionally, construction technology is from the 1960s, cranes are old and excavations must be done manually. However, he said, some clients are beginning to understand the need for improvements.

The Asian Development Bank is encouraging improvements and providing funding for things such as smart technologies and innovative development approach. The Pakistan government has frozen or reduced some taxes for construction projects and has granted amnesty to those with undeclared money if they invest in construction. This will be “to offset the negative impact of the Covid-19 pandemic on the national economy,” Prime Minister Imran Khan announced in January.

The government of Pakistan is also starting to focus on public-private partnerships. “Pakistan represents an opportunity for significant growth,” Mneimne explained. “The government’s attention to the construction sector, combined with the demographic realities of the population, means that urban development simply must occur.”

Riaz Haq said...

#Pakistan’s LSM (#manufacturing) sector grows 7.45% in first 8 months (July20-Feb21) of current fiscal year. Robust growth #automobile & #cement sectors in March 21 & and robust inflows of workers’ remittances, export earnings & revenue collection on taxes

The large-scale manufacturing (LSM) sector has grown 7.45% in the first eight-month (Jul-Feb) of current fiscal year 2021 amid third wave of the Covid-19 pandemic in Pakistan, according to the Pakistan Bureau of Statistics (PBS).

The LSM growth would largely offset impact of poor cotton production in agriculture sector and extend the much-needed support to the overall economic growth in the year.

Out of total 15 sectors in LSM, eight have posted growth. These include textile, automobiles, fertilisers, pharmaceuticals, food, beverages and tobacco, coke and petroleum products, chemicals and non-metallic mineral products.

However, output of seven sub-sectors contracted, which were including iron and steel products, electronics, leather products, paper and board, engineering products, rubber products and wood products.

“The LSM Index output increased by 4.85% for (the single month of) February 2021 compared to February 2020,” PBS reported. “The LSMI decreased by 4.15 % compared to January 2021.”

Pak-Kuwait Investment Company (PKIC) Head of Research Samiullah Tariq said the LSM output declined in February compared to January due to imposition of partial lockdown in some areas nationwide amid third wave of the pandemic in the country and lesser number of days in February.

“The robust latest production numbers reported by automobile and cement sectors for March…and robust inflows of workers’ remittances, export earnings and revenue collection on taxes in the month suggest that slowdown in LSM in February is a temporary phenomenon and it would revert in March,” he added.

The government fully supports housing and construction sector with the aim of reviving industrial production amid Covid-19 pandemic. It provided different tax incentives and awarded subsidiary on housing and construction loans, as it is of the view that the strategy would enable construction and allied industries to grow and extend much-needed support to gross domestic product (GDP).

The government has targeted to achieve GDP growth of 2.1% in the ongoing fiscal year 2021. The central bank remains confident the country would achieve an economic growth of 3% despite the third wave of the pandemic in the country. The Ministry of Finance anticipated the growth at 2.6% to 2.8%.

However, the International Monetary Fund (IMF) forecasted economic growth at 1.5% recently, which is half of what the State Bank of Pakistan (SBP) has projected. The World Bank’s outlook stands at 1.3% in FY21. The central bank said the economic indicators stood strong even as the number of coronavirus infections in the country soared.

The government has decided to impose smart lockdown in areas where the rate of infection is at 15%. Special Assistant to the Prime Minister (SAPM) on Health Dr Faisal Sultan said the other day that the coronavirus disease has severely affected the country’s healthcare system and “the situation is worse than that in June last year”.

A worsening situation is ringing an alarming bell, as it carries the potential to partially impact industrial out as well. The PBS reported that the textile sector grew 2.69% in the July-February period of the ongoing fiscal year compared to 0.33% in the same period of last year. Automobile sector surged 14.66% in the period compared to contraction of 35.93% in the corresponding period of last year. Food, beverage and tobacco sector increased 15.75% compared to contraction of 1.87%. Non-metallic mineral products surged 20.77% compared to 4.35%. Fertiliser sector jumped 5.66% in July-February period of FY21 compared to 5.99% in the same period of last year.

Riaz Haq said...

#Pakistan #car sales record triple-digit growth in March 2021. #Automobile sales in the first nine months (Jul-Mar) of the ongoing fiscal year jumped 37%. #lsm #manufacturing #economy #covid19 #pandemic

Automobile sales in Pakistan recorded a steep growth of 198% in March 2021 compared to the same period of last year primarily due to a lockdown in March 2020.

In addition, the dispatches of vehicles having engine capacity of 1,000cc and below skyrocketed 437% on a year-on-year basis.

According to data released by the Pakistan Automotive Manufacturers Association (PAMA) on Tuesday, car companies sold 20,801 units in March 2021 against 6,986 units dispatched in March 2020.

“The triple-digit growth in sales volume can be attributable to a low base effect amid a countrywide lockdown imposed by the government in March last year, which restricted economic activity,” said Arif Habib Limited analyst Arsalan Hanif in a report.

“Moreover, rebound in the economy after the easing of lockdown and a drop in the policy rate aided the rise in car sales.”

On a month-on-month basis, auto sales surged 27% due to extra working days in March compared to February.

He added that sales of cars of 1,000cc and below engine capacity soared on the back of a massive surge in demand for Suzuki Alto.

A report of Topline Securities added that the month-on-month growth in vehicle sales would be 20% if Lucky Motor Corporation (KIA, non-member of PAMA) was included.

It said that Indus Motor Company recorded the highest increase of 53% in monthly sales in March at 6,695 because the company had witnessed supply issues in February.

“Sales growth of Indus Motor Company was primarily driven by Hilux sales, which were up 103% month-on-month,” the report said.

It was followed by Honda Atlas Cars with a 30% expansion in sales to 3,153 units in March 2021.

Pak Suzuki Motor Company recorded a month-on-month growth of 14% last month as its sales stood at 10,161 units.

“Among new entrants in the industry, Hyundai Nishat sold 723 units in March 2021 with the inclusion of Hyundai Elantra, while Lucky Motor Corporation sold 2,000 units as per our channel checks,” it stated.

Read more: Car sales rise 15% in December

Nine-month figures

Car sales in the first nine months (Jul-Mar) of the ongoing fiscal year registered a rise of 37%. Automobile sales during the nine-month period came in at 134,522 units against 98,425 units in the corresponding period of last year.

Indus Motor Company managed to outperform during the Jul-Mar period of fiscal year 2020-21 with a 69% growth in sales. The company sold 42,670 units in the nine-month period compared to 25,300 units in the same period of last year.

It was followed by Honda Atlas Cars with a 54% growth at 21,698 units.

Pak Suzuki Motor Company’s sales expanded 13% during the nine-month period as the company sold 66,013 cars compared to 58,303 units in the same period of last year.

Riaz Haq said...

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.


Cement makers to expand production capacity by 40pc

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.

Riaz Haq said...

Pakistan’s electricity demand rises up to 20%
Minister claims growth of circular debt has been reduced by Rs200b this year

Federal Minister for Energy Muhammad Hammad Azhar has said up to 20% growth in demand for electricity has been witnessed this year, of which industrial demand has remained above 12-13%.

During a meeting with US Embassy ChargĂ© d’affaires Lesslie Viguerie, Azhar said that the increase in demand was a positive sign not only for the overall economy, but also for the energy sector as it boosted the confidence of investors.

Azhar told the US envoy that due to the prudent policies and effective measures undertaken by the government, the growth of circular debt had been reduced by Rs200 billion this year as compared to the previous year.

The federal minister also spoke about the approximate $800 million investment that Pakistan had made in the expansion and improvement of transmission and distribution system in two and a half years, which led to the record transmission of more than 4,000 megawatts this year.

“Another $117 million has been earmarked for the next financial year for the improvement of transmission and distribution system,” he said. Azhar invited US-based companies to explore possibilities of investment in Pakistan’s energy market. He highlighted that Pakistan and the United States had excellent working relationship in the energy sector, which would get a further boost from the new investor-friendly policies of the present government.

Shedding light on the close partnership between the Power Division and the United States Agency for International Development (USAID), the minister pointed out that yet another milestone in long-term energy planning had been achieved with their assistance in the Indicative Generation Capacity Expansion Plan (IGCEP), which was bound to address the issues related to planning and demand assessment.

Riaz Haq said...

#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.

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.

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.

Riaz Haq said...

According to the figures of Pakistan Bureau of Statistics (PSB), total iron and steel scrap imports in 11MFY21 rose 4.429m tonnes, valuing $1.7bn versus 3.6m tonnes at a cost of $1.4bn in the same period in FY20.

Steel bar makers on Thursday gave the first post-budget shock to consumers by raising prices by Rs5,000 per tonne to Rs150,500-151,500 per tonne citing unexpected surge in international scrap prices.

Before the Budget 2021-22, manufacturers had increased the prices by Rs3,000 to Rs146,500 per tonne. Steel bar makers had informed the construction sector that rising steel scrap prices in world market had affected their cost of production.

Keeping in view steel bar price of Rs110,000-113,000 per tonne prevailing in Nove­mber 2020, the total price jump to date is Rs38,000-40,000 per tonne.

However, the average per tonne import price of iron and steel scrap has dropped to $386 per tonne in 11MFY21 from $389 per tonne in the same period in FY20.

According to the figures of Pakistan Bureau of Statistics (PSB), total iron and steel scrap imports in 11MFY21 rose 4.429m tonnes, valuing $1.7bn versus 3.6m tonnes at a cost of $1.4bn in the same period in FY20.

Former chairman Association of Builders and Developers of Pakistan (ABAD) Hassan Bakhshi feared that the Prime Minister Imran Khan’s dream of providing low-cost housing to the masses under the Naya Pakistan Housing Scheme is unlikely to materialise in view of persistent and unchecked increase in prices of steel bars and cement. He urged the government to allow import of steel bars at reduced duties and taxes to break the cartel of steel bar manufacturers.

Mr Bakshi said the cost of construction on a high-rise project has increased by 10-15 per cent keeping in view a jump of 50pc in steel bar prices in the last one-and-a-half years when steel bar price was Rs100,000 per tonne. Steel bars hold 40-45pc share in total construction cost of a high-rise project.

Riaz Haq said...

Installed power capacity grows 3.6pc
Mushtaq Ghumman 11 Jun 2021

The country’s installed capacity of electricity has posted a growth 3.6 percent to 37,261 MW till April 2021, as compared to 35, 972 MW during the same period in 2019-20, but no significant change is witnessed in its consumption pattern.

According to the Economic Survey 2020-21, Pakistan is dependent on energy imports because there is a lack of investment in indigenous resources of hydro, natural gas and lignite. The government has decided to stop building new coal-fired power plants because of environmental issues. Due to significant increase in electricity demand, both state-owned companies and IPPs are actively engaged in producing electricity. However, fiscal sustainability has become a challenge due to increase in energy payments. This energy deficiency began from a fuel mix transformation which was initiated two decades ago, when power generation used to rely more on imported furnace oil than hydropower.

Till April, FY2021, installed capacity of electricity reached 37,261 MW, as compared to 35, 972 MW during the same period of 2019-20, posting a growth of 3.6 percent. The hydro share in total electricity generation has declined in FY2021 as compared to its share in FY2020. Currently, thermal has the largest share in electricity generation. Moreover, its percentage share in FY2021 has increased as compared to FY2020. Significant growth of RLNG usage in energy mix has helped improve supply to various power plants. RLNG is also supplied to fertilizer plants.

There is little change in the consumption pattern of electricity. During July- April FY2021, the share of agriculture in electricity consumption remained constant. However, the share of industry in electricity consumption has increased which shows revival of economic activities.

Commenting on history of energy crisis, the Economic Survey says that current energy crisis began to manifest itself by late 2007. The problem has evolved over the years from one of chronic power supply deficit to one where there is excess installed capacity but not enough cash flow in the system to run it. The latter created ‘circular debt’ issue. Specifically, the ‘circular debt’ in Pakistan’s energy supply chain refers to the cash flow shortfall incurred in the power sector from the delayed/non-payment of obligations by consumers, Discos and the government. It has continued to grow in size over the years, rising from 1.6 percent of GDP (Rs161billion) in 2008, to 5.2 percent of GDP (Rs 2,150 billion) in June 2020. The present government has given prime importance to resolve this issue and is working on various options to reduce circular debt.

In terms of energy-mix, Pakistan’s reliance on thermal which includes imported coal, local coal, RLNG and natural gas has been decreasing over the last few years. Pakistan’s dependence on natural gas in the overall energy mix is on the decline and the reduction of its share in the energy mix is due to declining natural gas reserves and introduction of LNG. The share of renewable energy has steadily increased over the years. The government is also taking measures to increase the shares of hydel and nuclear in energy-mix.

In Pakistan, special measures have been taken to use these innovations for domestic usage of energy, such as Electrical Vehicle Policy 2020-25.

The hydro share in total electricity generation has declined in FY2021 as compared to its share in FY2020. Currently, thermal has the largest share in electricity generation. Moreover, its percentage share in FY2021 has increased as compared to FY2020. Significant growth of RLNG usage in energy mix has helped improve supply to various power plants. RLNG is also supplied to fertilizer plants, industrial and transport sectors.

Riaz Haq said...

Rebar prices in Pakistan lower compared to China, Turkey

The steel manufacturers of Pakistan are selling rebars at a lower price as compared to international market prices by absorbing the constantly increasing cost of inputs.

In the recent past, the prices of scrap have skyrocketed. The average monthly price of steel scrap as per London Metal Exchange (LME) in June was $260 and now the latest price in the month of July 2021 has crossed $540 per ton.

Similarly, prices of steel rebar in international markets as per LME last year July was $420 in 2020 and in July 2021 the average rebar prices – assuming zero duty – are $831 in Turkey and $845 in China whereas, in Pakistan the rebar prices without duty and landing charges on scrap is $794.

“If we compare the prevailing international prices with our local markets, the prices in Pakistan are still at approximately 6 to 4 percent cheaper than China and Turkey respectively, which are among the largest steel producing countries,” PALSP said in a statement.

“All of this current market situation is beyond the control of manufacturers for the reason that the domestic steel industry is largely dependent on imported raw material and prices of steel are directly related to international prices of scrap/raw material.

Pakistan’s steel industry is selling bars at less price by constantly reducing their margins which is evident from the fact that their gross margins which were 19% plus in the period from 2015 to 2018 to 12 percent currently.”

The association said the government dropped a bomb shell on the long steel sector by giving FED exemption to erstwhile FATA/PATA hence giving competitive advantage to the steel industry of that area of Rs 25,000 per ton which is likely to throw the documented

Riaz Haq said...

#imrankhanPTI's #NayaPakistan #Construction Bet Boosts Investment. #Pakistan’s cement production capacity to grow by 31% to 91 million tons a year after announced expansions are completed. Pak home mortgage grew by 18% to a record Rs. 97.8 billion in May

#imrankhanPTI's #NayaPakistan #Construction Bet Sees #Cement Firms Boosting #Investment. #Pakistan’s cement production capacity will increase by 31% to 91 million tons a year after the announced expansions are completed. #economy

A group of 19 cement manufacturers have seen their shares rise 67% in the past year, compared with the KSE-100 Index’s 30% gain. About 1,000 projects have registered under the government initiative with the boom just about to start on the ground, according to Mohammed Hassan Bakshi, a member of Khan’s Naya Pakistan Housing Program.

Pakistani cement companies are investing to expand capacity a year after Prime Minister Imran Khan chose the construction sector to stimulate the economy.

Lucky Cement Ltd., Bestway Cement Ltd., and D.G. Khan Cement Co. are among more than half-a-dozen firms to announce plans in recent months. Pakistan’s cement production capacity will increase by 31% to 91 million tons after the announced expansions are completed, according to Insight Securities Pvt.

Khan’s government last year said it will subsidize low-cost housing and forgive tax evaders if they invest in construction projects. Banks have also been asked to increase their outstanding mortgages by at least 5% by December. Cement stocks have outpaced the nation’s benchmark index.

“Construction-related activities have a very, very big multiplier effect in emerging economies,” said Waleed Saigol, director at Maple Leaf Cement Factory Ltd. “The government has realized that the private sector has to play a leading role in getting the wheels turning again.”


The construction boom is also having other effects. Pakistan’s consumer home finance, which is one of the lowest in South Asia, has increased by 18% to a record 97.8 billion rupees in May, according to Foundation Securities Pvt. The country has also seen its first real estate investment trust in more than six years.

The nation’s economic growth is “supported by a continued strengthening of domestic consumption and resilient manufacturing and construction activity,” Fitch Ratings Ltd. said in May. However, a fresh wave of Covid-19 cases “could disrupt the positive momentum.”

Riaz Haq said...

Indus Motors CEO on #Manufacturing Boom in #Pakistan:"As (car production) volumes (in Pakistan) grow from 250,000 to 500,000 units, at least one million new jobs will be created by the auto industry alone which augurs well for the present (#PTI) government"

The government has showered auto assemblers with a number of incentives like a cut in the Federal Excise Duty (FED) by 2.5 per cent, additional customs duty (ACD) from 7pc to 2pc and general sales tax (GST) to 12.5pc from 17pc on cars up to 1,000cc. Consumers have recently witnessed price cuts of Rs11,000-400,000 on different engine power vehicles.

Industry people believe that the cut in duties and taxes in Budget 2021-22 is an integral part of the new Auto Development Policy 2021-2026 and some more relief measures are on the cards when the new auto policy will be unveiled.

Chairman Pakistan Automotive Manufacturers Association (Pama), Ali Asghar Jamali said the industry is extremely grateful to the government for duty and tax rationalisation that will certainly help grow industry volumes and in the process create more jobs — as the auto industry has the highest job multiplier effect.

“We are optimistic that through increased volumes the industry will generate more revenue for the government, create more jobs and increase economic activity in the country,” he said.

He said car and sports utility vehicle (SUV) sales would increase in 2021-22 after cuts in duties and taxes as almost all players have reflected the decrease in their prices. “Together with lower interest rates, growing remittances and a stable exchange rate and economy, demand should remain healthy for vehicles,” Mr Jamali said.

Riaz Haq said...

#Pakistan Commerce Chief says country aims to unlock #manufacturing & export potential. #Export-led growth & Make in Pakistan are our priorities. Exports reached a record $31.3b (goods $25.3b) & (services $6b) in fiscal 2020-21 despite #pandemic challenges

* The large-scale manufacturing sector recorded nine per cent growth during July-March 2020-21 – indicating a strong post-pandemic recovery.
* To bolster exports, the government has removed three barriers: Shift from fixed parity that artificially overvalued rupee, giving refunds to exporters and industrialists on time and exemptions on customs duties mainly on raw materials.
* The Ministry of Commerce has set its eyes on the export target of $35 billion in the next fiscal year.
As the country plans to move beyond simple manufacturing, the five key areas of focus will be: pharmaceutical, engineering, food processing, fisheries, fruits and vegetables.
* To identify new markets and boost trade ties and investments, Pakistan is eyeing massive participation at Expo 2020 Dubai.
“Make in Pakistan is our top priority now” Dawood asserted. Pakistan’s policy in the past has been to support trading rather than manufacturing which is now changing under Khan’s administration. “Manufacturing is wealth creation. It helps build industries, create more jobs” which Pakistan, a country of 220 million people, desperately needs. The large-scale manufacturing sector recorded nine per cent growth during July-March 2020-21 – indicating a strong post-pandemic recovery. Industrial support packages, incentives such as gas and electricity at regionally competitive rates for export-oriented businesses, tax exemptions for high-performing sector manufacturers helped achieve this growth.

Riaz Haq said...

#Pakistan's domestic #oil consumption in FY2021 (July 2020-June 2021) totaled 19.45 million tons, up 19% from the 16.36 million tons in the previous year as #economic activity picked up and the country's imports moved to Euro 5. #energy #economy #COVID

Pakistan plans to secure adequate supply of middle distillates to supplement its improving economy but expectations of tight Chinese motor fuel exports for the second half of 2021 may prompt the South Asian nation to raise imports from other main supply sources in the Middle East, according to oil product trading sources and market analysts based in Karachi.

Pakistan's domestic oil consumption in fiscal year 2021 (July 2020-June 2021) totaled 19.45 million mt, an increase of 19% from the 16.36 million mt consumed over the same period the previous year as an improvement in domestic economic activity led to a strong uptick in gasoil and gasoline demand, data by the country's Oil Companies Advisory Council showed.
The uptick in gasoil demand was evidenced by the 18% year-on-year jump in diesel sales over FY 2021 to 7.699 million mt, in contrast with 6.546 million mt consumed in FY 2020, the data showed.

Easing COVID-19 restrictions during the last fiscal year increased industrial activity, boosting overall demand for petroleum products, which helped the economy to grow 3.94% after two years, Shahrukh Saleem, research analyst at Karachi-based ALD Securities, said.

Moreover, diesel sales also increased on the back of a stimulus package in the farming sector, with subsidies given to the sector to aid in the increase in agricultural output, another industry source said.

In addition to gasoil demand, Pakistan also recorded a sharp year-on-year growth in gasoline consumption -- the result of a recovering automobile sector.

According to data from the OCAC, Pakistan's petrol sales recorded an increase of 13% to 8.237 million mt in FY 2020.

"Lower interest rates enticed consumers to borrow funds to buy cars on installments," Tahir Abbas, head of research at Arif Habib Securities, said.

In FY 2021, domestic car sales rose to 181,397 units, from 111,632 units a year earlier, data from Pakistan's Automotive Assemblers Association showed.

Middle distillate supply sources
The improvement in Pakistan's gasoil and gasoline demand helped to absorb barrels from the regional market, with traders saying that this may have a knock-on effect of shoring up prices should this upward trend be sustained.

Pakistan imported around 800,000 mt of gasoline from China in H1 2021, almost double the 437,000 mt received in H2 2020, latest data from China's General Administration of Customs showed.

This is especially so given that regional supply balances are tightening, with several sources noting that deep cuts to oil product export volumes from North Asian producers, in particular China, have resulted in a tight outlook for the rest of 2021.

China's middle distillate exports are expected to fall over the coming months as Beijing looks to limit oil product export permits in an effort to cut emissions to meet the country's carbon zero target, while reserving enough barrels for domestic consumers.

Beijing is likely to allocate about 7.5 million-9.5 million mt of quotas for exporting gasoline, gasoil and jet fuel in the final round of allocation for this year, S&P Global Platts reported earlier. If the allocation hits 9.5 million mt, the total allocation would work out to 39 million mt for 2021, about 14.7% lower from the actual export level of 45.75 million mt in 2020, Platts calculations showed.

Reflecting the tight supply outlook, the physical FOB Singapore 10 ppm sulfur gasoil crack spread against front-month cash Dubai averaged $6.96/b over July, sharply higher than the $5.17/b average in January.

Riaz Haq said...

#Pakistan providing subsidies, incentivizing #construction industry. #imrankhanPTI: Rs 35 billion allocated for low income buyers. Rs. 300,000 subsidy on every house for the first 100,000 homes. #NayaPakistan #economy via @ePakistanToday

While visiting Naya Pakistan Housing Authority’s project Farash Town Apartments in Islamabad on Friday, Prime Minister Imran Khan expressed the government is providing subsidy and incentivising construction industry to help low income people to have their own houses.

The prime minister said thirty-five billion rupees have been allocated for subsidy on construction of houses by the low income people. He said the government will provide three hundred thousand rupees subsidy on every house for the first one hundred thousand units.

He said while one hundred thousand apartments are under construction, the process will now speedily move forward as the structure of the system has been finalised.

He said the construction industry has been incentivised in different ways including tax relief. He said One Window Operation has also been started to facilitate the construction sector.

Regarding Farash Town, the prime minister said of the total 4400 apartments, 2000 each have been allocated for low income people and middle income people and four hundred apartments will be provided to slum dwellers.

The premier, while chairing a separate meeting, said Ravi Urban Development Authority and Central Business District projects will promote modern, self-sustained, clean and green residential and business facilities in the country.

The PM said these projects are very crucial for attracting foreign direct investment in housing and construction sectors in the country. The prime minister directed the authorities to win over maximum investment for both the projects.

Earlier, the prime minister was informed that work on the development of basic infrastructure including roads, sewerage and drainage in the Central Business District is in full swing and is likely to be completed ahead of schedule. The construction work on Bab-e-Pakistan Project will also start soon.

The prime minister was apprised that the Ravi Urban project is all set to develop its Saphire Bay Project. A state of the art industrial estate, powered by renewable energy, is also ready to be launched very soon.

Riaz Haq said...

Iron, steel output swells to 4.7m tonnes

KARACHI: The production of iron and steel, with billets/ingots mainly used in the construction industry, in the last 10 years swelled by 196 per cent to 4.777 million tonnes in FY21 from 1.616m tonnes in FY12.

H/CR sheets/strips, coils/plates, also known as flat steel products for production of electronics, surged to 3.296m tonnes in FY21 from 1.850m tonnes in FY12, Pakistan Bureau of Statistics (PBS) data of Large-Scale Manufacturing (LSM) showed.

Rising production of steel related products has led to higher imports of raw materials. For making steel bars, the country’s iron and steel scrap imports in FY21 rose to 4.719m tonnes costing $1.86bn from 1.568m tonnes valuing $538m in 2011-12, the PBS figures showed.

Besides, iron and steel imports swelled to 2.992m tonnes amounting to $1.959bn in FY21 from 1.755m tonnes ($1.4bn) in 2011-12.

Commenting on rising demand for steel bars, Pakistan Association of Large Steel Producers Secretary General Syed Wajid Bukhari said steel bar production till 2011-12 was about three to 3.5m tonnes while the current demand now hovers between 6.5m tonnes to 7m tonnes.

He attributed increase in steel bar prices to soaring scrap prices in the world market to $550 per tonne from $300 per tonne while one dollar is now equal to 168 as compared to Rs85 in 2011-12.

He said gas price increased to Rs97 per unit from Rs15 per unit in the last 10 years followed by power tariff to Rs21 per unit from Rs6 per unit. Freight charges are 100 per high now.

Mr Bukhari was of the view that steel bar demand would soar to nine to 10 million tonnes by 2023-24 in view of rising construction activities.

Private sector consumes 80pc of total steel bar production as compared to 20pc by the public sector, he added.

Hassan Bakhshi, former chairman Association of Builders and Developers (ABAD), said a multi-storey high project to be built on 1,000 yards plot with three floors for car parking requires around 1,100 tonnes of steel bars.

He claimed that steel bar demand has been on the rise due to 80pc construction work on highrise projects in Punjab while the Sindh Building Control Authority (SBCA) has been creating problems in clearing new projects.

“Only 91 projects have been cleared by the SBCA in the last two years in Karachi as compared to 500-7,000 projects a year some 10 years back,” he said.

The projects being promoted on the social, print and electronic media belong to Punjab while in Karachi, advertisement campaigns have been running for old projects which had been approved very late.

Pakistan Association of Parts and Accessories Manufacturers Association chairman Abdul Rehman Aizaz was of the view that auto assemblers and their vendors consume 15,000-20,000 tonnes per month of iron and steel in different forms which are used in making different parts by the vendors and the assemblers.

Bike production swelled to 2.475m units from 1.645m units in FY12, while jeeps/cars production rose to 163,122 units from 154,706 units in FY12.

Trucks and buses production in FY21 jumped to 3,808 and 570 units from 2,597 and 568 units FY12.

Domestic appliances and electronic products have shown phenomenal growth in the last 10 years. For example, production of refrigerators, deep freezers and air conditioners has swelled to 1.337m units, 109,029 units and 505,493 units from 1.062m units, 56,313 units and 240,338 units in FY12. Electric fans production rose to 2.498m units from 1.908m units.