The situation is still quite troublesome in the northern region of Pakistan. Yes, it is nothing new for the terror-hit portion of Pakistan, but even the cement manufacturers in the north seem to have caught the bad luck as they don seem to be too optimistic about the current scenario or the days to come.
Although, the cement prices have increased across the country by Rs 10-15/bag since the beginning of the year, they are still depressed, hovering around Rs 250-300/bag.
The plants in the landlocked northern region which possess 80 percent share in the total capacity have suffered the most from the lackluster domestic cement demand as the alternative opportunity to cash in on exports is limited and costly to the northern players.
On top of that, partial commencement of small plants in past few months, that had previously halted their manufacturing operation, has now burdened the market with oversupply. Moreover, the cement dealers also link the poor demand to dissolution of the local governments - which has slowed down the construction and development activities.
The persistent problem at the Wagha border has restricted the manufacturers ability to export the product to India, which still has enough appetite for imported cement.
On the contrary, the cement manufacturers in the southern region are singing a merry song, thanks to seaports in close proximity, facilitating them to capture the Middle East, Africa, Sri Lanka and Iraq markets.
Export demand is likely to grow further as many developing economies are forecasted to show strong growth. It is predicted that global cement demand will rise by 4 percent per year to 3.5 billion tons, in 2013, according to The Freedonia Group, a US based Research Company.
Rising coal, however, remains a major threat to the cement industry since demand for commodities is picking up in developing countries. Furthermore, increasing oil and petroleum products will also exert pressure on distribution cost, primarily for northern manufacturers.
However, northern players are still optimistic that government will soon facilitate them with inland freight subsidy enabling them to have a larger chunk of the cement exports.