THE multi-billion-rupee cement industry is in for a rough patch as the demand for the commodity continues to decline owing to sluggish construction activity in the domestic and regional markets – both on the back of an all-pervasive economic contraction. ‘If the construction activity does not pick up over the next six months, we might see some cement units closing down and others cutting their production. That will result in massive job loss and waste of huge investment in this sector as the industry tries to survive the persisting energy crunch and high credit cost,’ Mr Rehmat Khan, chairman of the All Pakistan Cement Manufacturers Association (Apcma), warned while speaking to Dawn. ‘Local demand for cement has depressed in the last several months because of reduction in public and private investment in construction and development projects. Exports are also plunging. Cash flow problems are mounting on falling sales,’ Mr Khan argued. After five years of steady and robust growth in sales at an annual average of 16 per cent to 2007 that saw production capacity grow phenomenally to 42 million tons a year, manufacturers are now trying to prepare themselves for years of slowing demand and diminishing sales. The domestic sales showed negative growth of 16 per cent year-on-year in the first half of the current fiscal to December after growing four per cent in the second half of last year to June. The sector has a surplus capacity of 12 million tons as its total sales at home and abroad remained around 30 million tons last fiscal and fears even lower capacity utilisation in the coming months. Some analysts say it could lead to a price war in both domestic and export markets and jeopardise some manufacturers’ viability, leading to closure of uncompetitive units. Most analysts say the inflationary pressures have substantially jacked up the cost of construction, which has resulted in the reduction in demand for cement. In addition, the government decision to cut...