KARACHI: The cement exports to India have dropped by about 80 percent in recent months and if the exports come to complete halt, it may cause 18 percent shortfall in the sales. In view of this situation, cement manufacturers have started exploring other markets and a leading manufacturer has sent 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 market, the second best market for exports in the years to come, a research report by WE Securities on cement sector says.
Analysts noted that cement exports are expected to slowdown by the end of FY10 and the prospect of export slowdown would go even further in medium-term as demand of the commodity may curtail wherein regional player, Iran may try to take a better share in the overall pie.
On the other hand, exports to India are declining constantly and it is expected that Indian avenue would shutdown completely once their own expansions come online by Feb 2010. Iran will also be self-sufficient to meet their own market needs wherein Chinese are gearing up to park excess supply into export markets swiftly and hence, avenues for Pakistan are likely to be limited.
European companies are planning to park their excess capacity in this region too as demand in Europe and the United States has also tapered-off due to slowdown in construction activities. This will probably result in a tough competition for Pakistani cement manufacturers in months to come and global cement prices will also come under pressure in the wake of a price war between the cement suppliers from different countries. On the other hand, Perusahaan Listrik Negara the Indonesian state-owned electricity firm has announced its expansion plan wherein the usage of coal is likely to increase from 50 million tonnes per year to 90 million tonnes. This may hurt Indonesian export of coal and demand may be diverted to other countries.
By 2010, Indonesia expects to add 10,000MW of new power generating capacity, which would require an extra 32 million tonnes coal usage with incremental 4 million tonnes consumption every year. Hence, higher demand of coal albeit bad weather forecast might amplify coal prices in the international market as the Indonesian coal index ICI has an influence to sway prices.
Analysts felt that in the long run, survival of the industry depends upon government spending on water courses, canals, drainages and housing projects announced under Public Sector Development Programme.
Source : Dailytimes