Adnan Faruqi
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India renews BIS certificates of Pakistani cement exporters
By Moonis Ahmed
KARACHI: Bureau of Indian Standards (BIS) has revived certificates of local cement exporters, allowing them to export to Indiaa leading importer of Pakistani cement, analysts said.
They said that cement exports to neighbouring country have witnessed a significant drop during the last fiscal year due to expiry of BIS certificates of some local cement producers. Although, exports to India were not completely halted, but a ray of hope has emerged for local cement producers as they are now allowed to export cement to India, Furqan Punjani, an analyst told Daily Times.
He said that with depressed cement exports in 9 MFY11 (down 14 percent YoY), this is a sign of relief for local cement producers as they have started exporting cement to India.
However with huge capacity additions in India and ongoing logistic issues, cement exports are expected to remain at 500-800k tonnes in FY12while in FY11 it could be around 80k-100k tonnes.
Cement exports have been under threat from regional capacity buildup where exports have witnessed a slump, which fell by a massive 14 percent in 9MFY11. This was seen due to cement exports by Saudi Arabia to its neighbors (Pakistan major buyers), halt in construction activities in UAE and Afghan border closure on regular intervals.
Thus, with all these new markets (India in this case) would create some enthusiasm for local producers in North, as ever-increasing construction activities in India would keep the grey cement demand alive for foreseeable future, he said.
It is worth mentioning here that Indian government is expected to allocate a $1 trillion for housing construction during next 5 years.
Thus with lower local demand, analyst expect producers in north would capitalise on this opportunity. Currently a few major producers have started exports to India in the wake of April 11which includes DGKC, LUCK, MAPLE and LPCL.
This new opportunity will increase additional cement dispatches to 80k-100k in current fiscal year FY11 while this would increase to 500k-800k accordingly in next two years, he said.
India enjoys huge effective cement manufacturing capacity of 261 million tonnes, which is expected to increase to around 290 million tonnes by the end of FY12. On the other hand, annual cement demand is around 210 million tonnes thus leaving capacity utilisation to remain on the lower side at 80 percent compared to 97 percent witnessed in FY08.
As a result, despite major expenditure expected on construction activities by Indian governmentit is likely that supply glut will prevail in Indian markets. Thus with all these, Pakistan cement exports future in India remains a shaky area compared to FY07-FY08 phase where India was in acute shortage of cement imported around 1 million tonnes from Pakistan.
In view of this certificates expiration of local cement producers, they had started exploring other markets by sending consignments to Sri Lanka, South Africa, Namibia, Oman and Mauritius.
There are also Pakistani companies that are searching European markets and it would be a major development given the fact that the primary export market of Afghanistan would remain stagnant. Cement exporters would eye UAE marketthe second best market for exports in the years to come.
Analysts felt that in the long run, survival of the industry depends upon government spending on watercourses, canals, drainages and housing projects announced under Public Sector Development Programme.
Daily Times - Leading News Resource of Pakistan
US $ 1 trillion investment is not for housing construction, its for infrastructure development in India.
By Moonis Ahmed
KARACHI: Bureau of Indian Standards (BIS) has revived certificates of local cement exporters, allowing them to export to Indiaa leading importer of Pakistani cement, analysts said.
They said that cement exports to neighbouring country have witnessed a significant drop during the last fiscal year due to expiry of BIS certificates of some local cement producers. Although, exports to India were not completely halted, but a ray of hope has emerged for local cement producers as they are now allowed to export cement to India, Furqan Punjani, an analyst told Daily Times.
He said that with depressed cement exports in 9 MFY11 (down 14 percent YoY), this is a sign of relief for local cement producers as they have started exporting cement to India.
However with huge capacity additions in India and ongoing logistic issues, cement exports are expected to remain at 500-800k tonnes in FY12while in FY11 it could be around 80k-100k tonnes.
Cement exports have been under threat from regional capacity buildup where exports have witnessed a slump, which fell by a massive 14 percent in 9MFY11. This was seen due to cement exports by Saudi Arabia to its neighbors (Pakistan major buyers), halt in construction activities in UAE and Afghan border closure on regular intervals.
Thus, with all these new markets (India in this case) would create some enthusiasm for local producers in North, as ever-increasing construction activities in India would keep the grey cement demand alive for foreseeable future, he said.
It is worth mentioning here that Indian government is expected to allocate a $1 trillion for housing construction during next 5 years.
Thus with lower local demand, analyst expect producers in north would capitalise on this opportunity. Currently a few major producers have started exports to India in the wake of April 11which includes DGKC, LUCK, MAPLE and LPCL.
This new opportunity will increase additional cement dispatches to 80k-100k in current fiscal year FY11 while this would increase to 500k-800k accordingly in next two years, he said.
India enjoys huge effective cement manufacturing capacity of 261 million tonnes, which is expected to increase to around 290 million tonnes by the end of FY12. On the other hand, annual cement demand is around 210 million tonnes thus leaving capacity utilisation to remain on the lower side at 80 percent compared to 97 percent witnessed in FY08.
As a result, despite major expenditure expected on construction activities by Indian governmentit is likely that supply glut will prevail in Indian markets. Thus with all these, Pakistan cement exports future in India remains a shaky area compared to FY07-FY08 phase where India was in acute shortage of cement imported around 1 million tonnes from Pakistan.
In view of this certificates expiration of local cement producers, they had started exploring other markets by sending consignments to Sri Lanka, South Africa, Namibia, Oman and Mauritius.
There are also Pakistani companies that are searching European markets and it would be a major development given the fact that the primary export market of Afghanistan would remain stagnant. Cement exporters would eye UAE marketthe second best market for exports in the years to come.
Analysts felt that in the long run, survival of the industry depends upon government spending on watercourses, canals, drainages and housing projects announced under Public Sector Development Programme.
Daily Times - Leading News Resource of Pakistan
US $ 1 trillion investment is not for housing construction, its for infrastructure development in India.
