India halts cement purchases from Pakistan
Aamir Shafaat Khan February 19, 2019
KARACHI: Indian importers have asked Pakistani cement exporters to recall their containers destined for the country following 200 per cent increase in duty on various products and
tense situation arising out after the Pulwama attack.
“The industry has started receiving messages from Indian buyers to recall containers. Some exporters have started recalling their shipments,” a cement exporter, who asked not to be named, said.
The exporter said 600-800 containers loaded with cement are currently at Karachi Port, high seas or at Colombo and Dubai.
He said cement exports to India were set to thrive further following the Indian government’s decision of allocating Rs 50 billion rehabilitation fund for Kerala which was devastated by floods in 2018. “As a result, both price and demand were on the rise after an additional demand,” he said.
Shipments en route being recalled; up to 800 containers stuck
“However, after the Pulwama attack, the situation has reversed. Our exports will remain in jeopardy till the next government takes control of India by June this year after the general elections,” he feared. According to him,
Pakistan’s annual cement export to India hovers between $70-80 million.
The exporter said 75pc of Pakistan’s cement exports to India were done via the Wagah border while the rest by the sea route.
Exports to India between July-January of the current fiscal year stood at 648,108 tonnes, while exports in 2017-2018 stood at 1.212m tonnes.
As per data of All Pakistan Cement Manufacturers Association (APCMA), cement exports began in 2007-2008 with shipment of 786,672 tonnes and since then continued to rise.
Pakistan’s highest ever exports of cement were to India – a massive 1.253 million tonnes in 2016-2017.
According to Shajar Capital (SC), the trade balance between the countries is almost $1.36bn and in India’s favour.
This makes the circumstances dismal on India’s end in case of a reciprocation of the response (in the form of duty hikes) by Pakistan.
Pakistan’s exports to India are worth almost $484m as of FY18 versus imports of about 1.8bn during SPLY. The country’s exports to India comprise of raw hides and skins ($21.4m) and other minor groups including cotton, medical equipment and mineral fuels etc.
The import composition on the other hand consists of cotton ($346.8m), organic chemicals ($267.5m), plastics ($115.8m), machinery (101m) and others including dyeing extracts, rubbers, iron and steel etc.
The immense upsurge from 7.5pc duty previously levied on cement imports to 200pc effectively means a complete ban on any purchase from Pakistan. However, the impact of the imposed raise of duty will not be as extensive, SC notes.
Around six companies export cement to India out of which DG Khan Cement and Maple Leaf Cement enjoy a greater share due to low transportation cost via road. Their exports will be more vulnerable to a slight decline in despatches.
Pakistan has major construction projects lined up for the current and upcoming years including commencement of civil work on the Mohmand dam by March-19, construction of Gwadar International airport along with hospitals and vocational centers starting by April 2019, construction of special economic zones, high rises in Islamabad and the government’s housing scheme. All these factors combined with growing international demand will help the industry retain prices and maintain its profitability in the long run, SC added.
According to Syeda Humaira Akhtar at BMA Capital, India previously imposed 19pc duty on cement imports from Pakistan, which was later removed in 2007 in the wake of rising local demand and limited production capacity particularly in Indian Punjab.
The increase in duty has effectively priced out Pakistan’s cement exports to India (current retention excluding duty resides around $44 per tonne).
She said apart from Kohat Cement, Lucky Cement and Attock Cement Pakistan Ltd (ACPL) appear to be the least affected given lower quantum of sales to India.
Meanwhile, Patron-in-Chief All Pakistan Fruit and Vegetable Exporters, Importers and Merchants Association (PFVA), Waheed Ahmed said that the country will not be exporting chuarray (dry dates) to India. “
We usually export chuarray worth $145 million (210,000 tonnes) to India which are in demand during religious ceremonies and weddings. However, now exports won’t be possible following the attack. Indian buyers are also worried,” he said.
India halts cement purchases from Pakistan - Newspaper - DAWN.COM
