DG Khan suspends operations at Kofli Sattai and Khairpur plants

In view of the measures to fight the spread of COVID-19 including the current lockdown by the authorities, Pakistan-based cement producer DG Khan will temporarily suspend the plant operations at Kofli Sattai, Dera Ghazi Khan, and Khairpur, Chakwal, in Punjab, with immediate effect, said the company in a Pakistan Stock Exchange filing. The two plants have a total production capacity of 4.22Mta.

State support
Meanwhile, Pakistan Prime Minister Imran Khan reiterated that he is against the complete lockdown of the country and transport system as it will affect the supply chain of essential industries and particularly the construction sector, a major source of cement demand.
 
The State Bank of Pakistan (SBP) cut on 24 March the policy rate by 150bps – within a week of its last monetary policy meeting, in which it had cut the rate by 75bps. Therefore, the cumulative interest rate cut is 225bps, from 13.25 per cent to 11 per cent in total, which is the sharpest move by the SBP in a decade. This is expected to positively impact the finance cost of cement companies.
 
Experts think the purpose of such a large cut is not so much to stimulate economic activity but to largely mitigate the adverse impact of an extended lockdown and encourage business sentiment. The rate cut was complemented by a PKR1trn (US$6.04bn) relief package, announced by the government, for the poor and vulnerable sectors. The cut in petroleum products prices would reduce the dispatch cost of cement companies.