Pakistan cement exports witnessed a growth of 70 per cent in 1HFY09 to reach 5.05Mt as total dispatches register an increase of three per cent year-on-year (YoY) basis, with total sales amounting to 14.2Mt.

This increase has changed the sales composition, as exports now comprise 35 per cent of the total dispatches. Export performance can be attributed to depreciating rupee, and global demand-supply gap. However, exports declined by 39 per cent Month-on-Month (MoM) in December 2008.

Exports are expected to register a decelerating growth, as the global economic slowdown deepens further reducing demand for housing and construction activities. The demand supply gap in the international market is expected to narrow down further as other countries gear up with more capacity, thus reducing export demand, experts said.

The local dispatches have fallen by 15 per cent in first six months of FY09, however, the exports spiked by 70 per cent. As per expectations, the economic slowdown, consistently high cement prices coupled with the ongoing winter season have translated into a decline in both local and export volumes by 21 and 39 per cent (MoM), respectively.

The downslide of local demand continues as local sales register a 15 per cent decline in 1HFY09.

"Pressure is being exerted on local demand, primarily due to macro-economic slowdown, high interest rates, sky high cement prices, which leaped by 65 percent during the said period. The local prices are currently hovering around an average retail price of Rs 355 per 50kg bag (Rs 7100 per tonne) and a retention price of Rs 255 per 50 kg bag (Rs 5,109 per tonne).

"Declining freight charges are also eroding the edge which Pakistan possessed due to geographical proximity," analyst added. Moreover, the downward slide in local demand is also expected to prevail as a result of cut in Public Sector Development Progarmme that is a major determinant of cement demand.