Pakistan's cement industry is underpinned by abundant indigenous raw materials, boasting 26 operational plants with a combined annual installed capacity of 83.179 million tons. Despite this capacity, actual cement sales have consistently declined month-on-month throughout the 2022-23 fiscal year, primarily due to decreased domestic demand. Total cement sales for the year amounted to 44.58 million tons, marking a 15.71 percent decline year-on-year.
Pakistan's cement industry is underpinned by abundant indigenous raw materials, boasting 26 operational plants with a combined annual installed capacity of 83.179 million tons. Despite this capacity, actual cement sales have consistently declined month-on-month throughout the 2022-23 fiscal year, primarily due to decreased domestic demand. Total cement sales for the year amounted to 44.58 million tons, marking a 15.71 percent decline year-on-year.
This trend persists, with only a brief respite in the earlier months of the current fiscal year 2023-24. In the first seven months (July 2023 to January 2024), total cement sales reached 27.296 million tons, compared to 25.770 million tons in the corresponding period of the previous year, representing a nominal six percent growth. Lucky Cement has recently emerged as Pakistan's largest cement producer, with a cumulative annual installed capacity of 14.955 million tons across its two plants, followed by Bestway Cement with five plants and a cumulative capacity of 14.798 million tons annually.
Other notable players include Fauji Cement (8.355 million tons), Maple Leaf Cement (8.190 million tons), and DG Khan Cement (7.056 million tons). Additionally, major companies like Pioneer Cement, Kohat Cement, Cherat Cement, Power Cement, Dewan Cement, Attock Cement, and Gharibwal Cement contribute significantly to the industry's capacity. Smaller capacity plants include Flying Cement, Fecto Cement, Thatta Cement, and Dandot Cement.
Over the past decade, substantial capacity expansions have been witnessed, driven by optimistic projections of high cement demand, especially in export markets. Annual installed capacity has surged from 47 million tons in 2010 to the current 83 million tons. Despite reduced domestic demand, the industry has experienced robust revenue growth primarily due to price hikes in the domestic market.
However, amidst economic challenges, inflation, and political instability, domestic cement consumption is expected to remain subdued unless the government implements measures to stimulate construction activities and support the industry. Nevertheless, there is potential for increased cement consumption in the future, justifying planned capacity expansions.
Analyzing the sales breakdown, domestic cement sales during the reviewed period (July 2023 to January 2024) accounted for 23.197 million tons, a two percent decrease, while exports amounted to 4.099 million tons, nearly double compared to the same period in 2022-23.
Given sluggish domestic sales, industry focus has shifted towards boosting exports and exploring new markets. Despite global hurdles, Pakistani cement exports surged from 2.152 million tons in 2021-22 to 4.566 million tons in 2022-23, maintaining roughly ten percent of total sales. Pakistan earned $323 million in 2022-23 from cement exports, compared to $165.7 million in 2021-22, leveraging the devaluation of the Pakistani Rupee against the US Dollar.
While Japan, Vietnam, and China lead globally in cement & clinker exports, Pakistan's exports have historically been inconsistent due to various factors. However, cement exports still represent a nominal share of Pakistan's total commodity exports, accounting for 0.538 percent in 2021-22 and 0.939 percent in 2022-23. Major export destinations in 2022-23 included Sri Lanka ($104 million), Afghanistan ($70.9 million), Bangladesh ($56.4 million), Madagascar ($36 million) and other countries such as Qatar, South Africa, Mozambique, Togo and Cameroon (cumulative $55.7 million).
In 2021-22, Pakistan exported cement to Afghanistan ($48 million), Sri Lanka ($39 million), Madagascar ($25 million), Bangladesh ($23 million), and small quantities to Qatar, Yemen, Kenya, Ghana, Somalia, and the USA valuing $30.7 million. It is interesting to note that Pakistan imported cement in 2021 from Iran, the UAE, Oman, China and the USA valuing $3.48 million.
In the past, Pakistan has exported cement in significant values. Exports amounted to above $570 million in 2012, $ 530 million in 2013, and $ 517 million in 2014. However, exports dropped to $345 million in 2015, declining further in subsequent years, to the level of $270 million in 2021. Gradually, Pakistan lost some markets to cheaper sources of supply from Iran, India, and China. Bangladesh revamped its cement industry, not only making the country self-sufficient in cement requirement but has recently entered into the export market. Export of cements from Bangladesh has earned about $14 million in 2022-23 (July 2022 to June 2023). It is imperative for the industry to regain momentum in the international markets.
Leading exporter Lucky Cement, a major exporter to Afghanistan, is equipped with its own export terminal at Karachi Port, enjoying significant advantages in both bagged and bulk exports. Additionally, new markets are being explored, with Power Cement set to supply the first-ever Pakistani cement shipment to the UK. Likewise, DG Khan Cement has secured a substantial order from the USA and is eyeing markets in Mexico, the UK, France, and Germany. However, to maintain competitiveness in international markets, the industry must enhance its global standing.
The writer is retired chairman of the State Engineering Corporation
