Capacity utilisation of Pakistan’s cement industry drops to lowest on record

Capacity utilisation of Pakistan’s cement industry dropped to 54.64% during FY24 (July-April), its lowest level on record, revealed the Economic Survey 2023-24 unveiled on Tuesday evening by Finance Minister Muhammad Aurangzeb.

Pakistan’s cement industry has an overall production capacity of 82.25 million tonnes, but local dispatches and exports totalled a paltry 37.45 million tonnes during the 10 months of the outgoing fiscal year.

This put capacity utilisation at around 55%, which is the lowest since at least FY2006-07. Data before this period was not available in terms of capacity utilisation.

In FY2007, production capacity stood at 30.5 million tonnes with total dispatches at 24.26 million tonnes.

During these 17 years, the industry has taken its capacity to 82.25 million tonnes. However, in the current economic environment, the cement sector has been one of the hardest hit amid record high interest rates, runaway inflation and a rollback of development projects by the government becoming major headaches.

“The cement industry in Pakistan has faced multiple challenges,” stated the Economic Survey 2023-24 in its chapter on ‘Manufacturing and Mining’.

“The government’s fiscal constraints and limited foreign aid have delayed rehabilitation efforts in flood-affected areas and caused the overall slowdown of the construction sector.

“Additionally, the economic slowdown in global markets has resulted in lower cement exports to significant export destinations like Sri Lanka and Bangladesh, which have foreign exchange crises. Besides, the industry has also been impacted by the massive increase in prices of construction materials.”

Pakistan exports its cement and clinker to Afghanistan, Sri Lanka, Maldives, Djibouti, Somalia, Tanzania, Kenya, Uganda, Mozambique, South Africa, Madagascar, Comoros, Seychelles, Iraq, Ethiopia, Qatar, and the USA, according to the Economic Survey.