The total exports share of Afghan market for cement from Pakistani have dropped to 24 percent in FY19 from over 54 percent in FY2007.
The chief reason is that Afghanistan has opened its doors to other countries including Iran which has a huge overcapacity of cement production.
According to industry experts, the cement industry in Punjab and Khyber Pakhtunkhwa areas of Pakistan has been affected the most from this huge decline of cement exports to Afghanistan. They said that the export of cement from Punjab and Khyber Pakhtunkhwa has registered a decline of 16 percent in the first eight months (July-Feb) of fiscal year 2018-19 (FY19).
They said that Afghanistan was the only market of Pakistani cement till 2007. Then came other markets, but the share of Afghanistan in Pakistan’s total cement exports remained high, hovering at around 54 percent of all cement exports in 2013.
This share started increasing as other African and Asian markets also opened up. They said that during 2017, the cement exports started dropping substantially from 45 percent to 35 percent and now in 8MFY19, the exports to Afghanistan constitute only 24 percent of all exports.
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It has been claimed that presently. Iran uses only half of its total cement domestically while rest of 40 million tons is ‘smuggled’ to neighbouring countries of Afghanistan, Pakistan and India.
Additionally, Iran is further planning to enhance its capacity to 120 million tons by 2025. Following the entry of Iranian cement in Afghan market after international sanctions were lifted, Pakistan exports share dropped to 1.2 million tons cement to the Afghan market.
There is also the fact that political tensions between the countries have not always been conducive to vibrant trade relations, experts added.