Cement Sector in Pakistan
1. INTRODUCTION
2.1 Objective and Scope
The report will present a holistic overview of the industry; current situation, industry structure, critical revenue and cost drivers, exposure of BOP in the sector and its future outlook. 2.2 Cement Sector of Pakistan
The Cement sector of Pakistan has 23 players, operating 29 units, with a total production capacity of 44.8 million tons, divided into North and South, as follows: North Zone | South Zone | * Punjab and Khyber Pakhtoon Khwa | * Sindh and Baluchistan | * 19 manufacturing units | * 10 manufacturing units | * 80% of rated capacity, i.e. 35.9 million tons | * 20% of total rated capacity, i.e. 8.9 million tons |
The overall capacity utilization of the sector, as per FY-10 dispatches is at 76%.
The basic raw materials for cement include limestone (upto 80%), clay (upto 15%) and gypsum (5%), all of which are abundant in Pakistan making basic raw material very cheaply available to cement manufacturers.
None of the cement producers in Pakistan enjoys any material product differentiation because of the highly standardized nature of product therefore consumers usually regard ‘price’ as a key determinant. Major constituents of the cost are energy & power - over 60% of cost of production of cement - and transportation costs. In addition to these elements efficiency of production process is critical in keeping the overall cost structure competitive. In this regard, size of the plant, its age, and origin - European or Chinese - are of importance.
Until recent years, almost all the plants operating in the country were based on furnace oil, but the increasing furnace oil prices forced the cement industry to switch over to Coal-powered/dual-fuel plants. However, the price of coal has shown significant volatility over the recent periods therefore, some producers, having dual-fuel plants, use a mixture of coal and gas, alternating between the two as per changes in prices and
2.1 Objective and Scope
The report will present a holistic overview of the industry; current situation, industry structure, critical revenue and cost drivers, exposure of BOP in the sector and its future outlook. 2.2 Cement Sector of Pakistan
The Cement sector of Pakistan has 23 players, operating 29 units, with a total production capacity of 44.8 million tons, divided into North and South, as follows: North Zone | South Zone | * Punjab and Khyber Pakhtoon Khwa | * Sindh and Baluchistan | * 19 manufacturing units | * 10 manufacturing units | * 80% of rated capacity, i.e. 35.9 million tons | * 20% of total rated capacity, i.e. 8.9 million tons |
The overall capacity utilization of the sector, as per FY-10 dispatches is at 76%.
The basic raw materials for cement include limestone (upto 80%), clay (upto 15%) and gypsum (5%), all of which are abundant in Pakistan making basic raw material very cheaply available to cement manufacturers.
None of the cement producers in Pakistan enjoys any material product differentiation because of the highly standardized nature of product therefore consumers usually regard ‘price’ as a key determinant. Major constituents of the cost are energy & power - over 60% of cost of production of cement - and transportation costs. In addition to these elements efficiency of production process is critical in keeping the overall cost structure competitive. In this regard, size of the plant, its age, and origin - European or Chinese - are of importance.
Until recent years, almost all the plants operating in the country were based on furnace oil, but the increasing furnace oil prices forced the cement industry to switch over to Coal-powered/dual-fuel plants. However, the price of coal has shown significant volatility over the recent periods therefore, some producers, having dual-fuel plants, use a mixture of coal and gas, alternating between the two as per changes in prices and