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Introduction to Nepalese Cement Market Pg3

1.4       Import of cement

The deficit in the supply of cement is met through import. Cement is imported from East Asian countries and India. However, after the decontrol of cement by the then Government of Nepal, the import has been predominantly from India. Import from other countries is negligible. The import statistics of cement from India is presented in the table 7 and table 8.

Table 7: import of cement from India


Fiscal year
Import of cement from India (MT)
1992/93
152,680
1993/94
218,115
1994/95
281,138
1995/96
296,995
1996/97
403,175
1997/98
468,256
1998/99
616,409
1999/2000
619,179
2000/01
1,264,803



……contd
Fiscal year
Import of cement from India (MT)
2001/02
1,379,817
2002/03
1,329,574
2003/04
931,541
2004/05
1,085,920
2005/06
646,207
Source:       Import and export data published by Department of Custom, copy

in 2008. As import figures from 2000/01 – 2005/06 were not published

these were copied from the records of Department of Custom.

Table 8: Cement imported from India


Fiscal year
Quantity (MT)
Amount

(Rs. in '000)
Price/tonne
Quantity (MT)
Total quantity (MT)
(1)
(2)
(3)
(4 = 2/3)
(5  = 1 + 4)
2000/01
875,019
2,104,835
5,400
389,784
1,264,803
2001/02
909,195
2,588,424
5,500
470,622
1,379,817
2002/03
851,784
2,704,291
5,660
477,790
1,329,573
2003/04
563,661
2,185,209
5,940
367,880
931,541
2004/05
696,667
2,475,907
6,360
389,293
1,085,960
2005/06
424,434
1,543,542
6,960
221,773
646,207
Cement import figure show increasing trend. It is due to increase in construction of residential buildings. People find it more beneficial to invest their saving either in gold or in construction of building. Investment in industries and cash deposition in banks are no longer attractive due to recession, conservative industrial policy, non-availability of infrastructures like power and roads and lower rate of interest of the banks. But importing of cement from India after the fiscal year 2002/03 shows erratic decreasing trend due to conflict between GON and Maoists. People instead of investing  money in building construction, invested in gold and other trading activities.
    1. Apparent consumption of cement
Based on tables 5, 6, 7 and 8 the apparent consumption of cement has been derived and presented in table 9 below.

Table 9: Apparent consumption of cement




Fiscal year
Domestic production
Import
***
(D)
Total apparent
consumption
(E=C+D)
Public
sector *
(A)
Private
sector **
(B)
Total domestic
production
(C=A+B)
1992/93
247,891
91,822
339,713
152,680
492,393
1993/94
315,514
91,822
407,336
218,115
625,451
1994/95
326,839
93,659
420,498
281,138
701,636
1995/96
309,466
133,860
443,326
296,995
740,321
1996/97
226,681
341,878
568,559
403,175
971,734
1997/98
139,080
443,518
582,598
468,256
1,050,854
1998/99
190,588
434,277
624,865
616,409
1,241,274
1999/2000
205,835
397,317
603,152
619,179
1,222,331
2000/01
215,098
378,837
593,935
1,264,803
1,858,738
2001/02
233,000
415,797
648,797
1,379,817
2,028,614
2002/03
255,171
1,482,190
1,737,361
1,329,574
3,066,935
2003/04
279,412
1,256,638
1,536,050
931,541
2,467,591
2004/05
277,736
1,578,854
1,856,590
1,085,960
2,942,550
2005/06
212,830
1,289,161
1,501,991
646,207
2,148,198
Source:  * Economic survey, 2005/06 & 2006/07, MOF.

                ** Economic survey, 2005/06, MOF.

                *** Import & export statistics, Department of Custom.

The consumption has always been much below the market demand due to low supply situation. The real demand is 10% - 20% higher than the apparent  consumption. Moreover, the consumption of cement by foreign aided project is not properly recorded. It is believed that if there is regular supply of cement, donor agencies will also prefer the locally available cement to imported cement. Indian aided projects brought cement from India which is not recorded in custom points. Also 20% - 30% of the total consumption of cement is not recorded in the import statistics due to open border system between Nepal and India. Those are the reasons for the lower apparent consumption of cement. If we consider all above facts, the real demand of cement could be higher by at least 30%.

The total apparent consumption as depicted in Table 9 shows erratic trend in the cement consumption. In order to remove distortion in consumption trend moving average method is adopted which shows increased in cement consumption  from 6% in 1995/96 to 52% and 65% in 2000/01 and 2002/03 respectively and similarly, cement consumption declined to 3% in 1999/2000 and 20% in 2003/04. However, the overall average consumption growth rate comes to 17%. But for the purpose of consumption projection the growth rate of 10% is adopted which is very conservative. This growth rate though lower will not affect the validity of the market study.