High input costs affecting cement production: APCMA

Cement exports have shown a dismal performance as witnessed by a paltry 0.21 percent increase in the first quarter of the financial year 2012 as compared to corresponding period last year. According to an All Pakistan Cement Manufacturers Association (APCMA) statement issued here on Friday, exports to different countries via sea route have dropped significantly by 24 percent as compared to 1QFY11, standing at 0.857 million ton in 1QFY12.
Exports to India increased by 53.8 percent but the small volume of 0.163 million tons only in the 1QFY12 was contrary to expectations of an over 1.0 million tons increase owing to improving trade relations between Pakistan and India. According to the statement, major factor behind limited exports is sharp increase in input cost as prices of almost all of major inputs like, furnace oil; coal and electricity etc have surged during first quarter of this financial year.
The transportation cost has also increased exorbitantly due to increase in diesel prices. In the meantime, there was no progress in cement exports by truck via Wahgah Attari border post which if opened, can substantially boost export volume, APCMA spokesman claimed.
Cost of power has increased by 9 percent during last three months from Rs 7.1 per KWH to Rs 7.7 per KWH with increasing loadshedding and the situation seems set to become worse with expected further increase of Rs 3.04 per KWH in power tariff. Rates of diesel, coal and furnace oil have also increased by 15, 8 and 28 percent respectively in first quarter of FY 2012 and the impact of this increase for the upcountry plants is much higher as these inputs have to be transported from Karachi.
Gas rates have also increased during last 3 months by over 10 percent for cement plants and as well as their captive power units. However, local cement sales improved due to a slight increase in local consumption, which witnessed a growth of 12.23 percent during the first quarter of current fiscal year 2011-12. The cement manufactures of the Northern region have sold 4.23 million ton cement while Southern mills sales stood at 0.945 million ton in July-September 2011 period.