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Pakistan’s Cement Industry Faces Mixed Fortunes in January 2024

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In January 2024, Pakistan’s local cement sales experienced a significant downturn, decreasing by 17.30% to 2.967 million tonnes compared to the same month last year. This decline is attributed to a combination of factors, including a slowdown in construction activities during the winter, an increase in the cost of essential materials, and challenges in transportation stemming from the new axle load management regime. Despite the domestic slump, the cement industry saw a silver lining as exports rose by 7% to 446,559 tonnes, up from 418,067 tonnes in January of the previous year, according to data from the All Pakistan Cement Manufacturers Association (APCMA).

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The implementation of the new axle load policy has notably impacted the industry, significantly reducing the loading capacity of transport vehicles. This change has led to operational inefficiencies and a spike in inland transportation costs, alongside heightened freight, handling, and shipping expenses for exporting cement. The APCMA has voiced concerns that these compounded factors will inevitably pressure cement prices, potentially leading to increased costs for domestic consumers and negatively affecting export competitiveness. The association has made repeated appeals to the government to reconsider the axle load regulations to mitigate the industry’s challenges.

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Contractions in Pakistan’s Non-Textile Exports Amid Overall Export Growth

Despite the domestic market’s contraction, the first seven months of the fiscal year 2024 painted a more nuanced picture of the industry’s performance. While domestic sales saw a slight decrease of 2% to 23.196 million tonnes, exports surged by 90% to 4.1 million tonnes, buoyed by factors such as a drop in coal prices and the devaluation of the rupee, which made exports more financially attractive. Consequently, the total cement dispatches (including both domestic and export) for the period increased by 6% year-on-year to 27.296 million tonnes. However, the industry faces ongoing challenges, including price adjustments and regulatory burdens that may influence its future trajectory.

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