Shrinking Demand: Cement Producers Cut Output, Builders Say No New Projects After Up To 40% Increase Inputs’ Prices
Amid the shrinking economic activity and reduced demand, DAWN in its latest report said cement producers are shutting down production lines, bringing the total sector’s capacity utilisation down to 50 per cent in the case of some companies.
According to an exclusive report by Aamir Shafaat Khan, sources in the industry attributed the decline to various factors, including collapse of demand due to lack of private and government-funded infrastructure projects.
But even before this report, Power Cement Ltd had suspended almost a third of its output as demand and prices fall amid an economic downturn and higher costs bite.
Also read: Economy In ‘Right Direction’? Power Cement Cuts Production By One-Third Amid Reduced Demand
DAWN reported that Association of Builders and Developers (ABAD) Chairman Mohammad Hassan Bakhshi said no new projects have been announced in the last three to four months after input costs increased by around 30-40 per cent.
He said the arrival of instalments from customers for the already-booked projects has halved as many people are unable to pay their dues owing to the rising cost of living on account of soaring food prices and utility costs.
“The only option they have is to sell their apartments,” he added. “But the market lacks buyers for flats despite the fact that prices have not shown any steep hike,” he added.
But the All Pakistan Cement Manufacturers Association (APCMA) spokesperson, on the other hand, stated that the sector is operating at 75 per cent capacity.
However, the APCMA has suspended issuing cement dispatch data since April and refused to give a specific reason for the halt in reporting.
The requirement of CNIC on each sale of over Rs50,000 coupled with country-wide monsoon season, slowdown in private sector construction activities and lack of public sector development programmes are some of the reasons given by the manufacturers for decline in local sales.
However, as per the Large Scale Manufacturing Index (LSMI) data, cement production dipped by around three per cent to 39.922 million tonnes in FY19 whereas exports rose to 6.4m tonnes.
An official working for the Lucky Cement said the overall sales in the southern region had fallen to 15,000-16,000 tonnes per day from 23,000 tonnes in June. “Our overall sales are down by 40-45 per cent.”
He added that peak cement season starts from February and ends in October while sales remain subdued from November to January owing to winter season.
Meanwhile, sources said southern plants with one production line are operating at 50 per cent capacity while some plants having three to four lines had closed one or two lines.
For example, Attock Cement had resumed its two production lines on Tuesday this week out of three in southern region after keeping them closed for the last 10 days.