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Massive demand for Pak cement in South Asian, African markets
By Arshad Hussain -
April 19, 2018
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KARACHI: The export of cement to India and Vietnam is viable through land routes since there is a huge demand for Pakistani cement in these countries, while East Africa in general, and Uganda and Tanzania, in particular, could be other potential export venues for Pakistani cement, said speakers of conference at a local hotel here Thursday.
In the next 10-15 years, India may become a blue-chip market for Pakistan cements as its reserves of limestone are rapidly dwindling. Moreover, inter-state Indian tax issues and logistics make it difficult for various states to buy cement from each other, thus, allowing them to prefer importing cement from Pakistan. The demand of cement in India is more than 1 million tons per annum (1mn tpa).
Al Habib Capital Market Ltd (AHCML), a subsidiary of Bank Al-Habib, conducted a cement conference with Irfan Chawla and Irfan Amanullah as guest speakers to grapple with the ever-changing dynamics of the cement sector of Pakistan.
Speakers of the moot said that a higher potential for Pakistan rested abroad since excess capacities in China have curtailed, substantially on the back of environmental concerns, while demand from Bangladesh (5mn tpa), the largest clinker importer from China, is constant.
The quality of Pakistani cement remains far more superior to Iranian cement, earning Pakistani cement recognition and trust abroad, they said.
Moreover, the speakers remained sceptic of the Basha-Diamer Dam mentioning that the dam is situated in a disputed territory, thereby making it unlikely to attract foreign investment from an international financial institution. If, however, the dam project is successful, it is expected to generate a cumulative 5 million tonnes incremental demand for cement.
Recently, LUCK and ACPL have exported clinker from South Asian countries and explored avenues for Pakistan clinker abroad. ACPL has recently inked a deal for the export of 150,000 tons of clinker at $34/ton FOB, Karachi. However, the margin on this deal is almost negligible as the key focus of management was to explore new markets and develop long-term relationships with dealers abroad.
With the recent commissioning of 1.3 million tons expansion by LUCK and 1.2 million tons expansion of ACPL, the upcoming 2.8 million tons expansion of DGKC in South is expected to temporarily disrupt pricing mechanism in South. In the short-term anxiety and imminent price-war fears loom, however, in the long run, the management foresees that things will settle down.
Regional, political stability has also paved way to further stimulate economic and infrastructure development facilitating cement off-take in the local market.
In North, prices have increased by about Rs30/bag recently but only selectively. Furthermore, any price increments in future will depend upon steps to be announced in Budget 2018-19 especially those related to FED and other charges dictating its cost, hence its price.
