Pakistani cement demand set to rise 47% in next five years

Domestic cement consumption in Pakistan is predicted to rise at an average annual rate of eight per cent over the next five years, an increase of nearly 47 per cent in total.

Analysts point to the development of the China-Pakistan Economic Corridor (CPEC), higher government spending in the pre-election period and an increase in private sector construction activity as the main drivers of this growth.

In FY2016, overall cement dispatches rose 10 per cent YoY to 38.8Mt, with local sales rising at 17 per cent. In the first five months of FY2017, domestic sales continued their brisk growth, being 12 per cent higher YoY.

However, one research firm has warned that rising international coal prices threaten industry profits. The cost of coal imports rose 98 per cent between February and November 2016, although it is likely to fall from its current high of US$97.20/t to around US$70-75.

Despite higher fuel costs, Pakistan’s cement sector has been buoyant, with capacity utilisation reaching greater than 85 per cent and producers investing in new facilities.

Production capacity is likely to increase by 48 per cent to 67.6Mta by FY2020. Of this, 15Mta of capacity will be added in the north of the country, with around 7Mta being built in the south.