Domestic dispatches rise and exports fall in January

Pakistan's total cement industry dispatches increased by 1.2 per cent in January 2023 to 4.01Mt from 3.96Mt dispatched during the same month of last fiscal year. Local cement dispatches advanced by 5.2 per cent YoY to 3.587Mt in January 2023 from 3.409Mt in January 2022. However, exports dispatches declined by 24.1 per cent as volumes fell from 551,006t in January 2022 to 418,067t in January 2023, says the All Pakistan Cement Manufacturers Association (APCMA).

Moving forward, the management of Lucky Cement expects the local demand will continue its downward trajectory, with sales expected to decline by ~18-19 per cent for the full year. Demand recovery may be expected once interest rates start tapering off. Furthermore, exports may increase further if the coal price falls to US$120/t (current: ~US$147/t). Topline Securities believed exports during January 2023 were down due to the global economic slowdown, higher interest rates and unfavourable export pricing.

AHL Research stated that the sector's capacity utilisation dropped to just 60.2 per cent in January 2023 amid the addition of new plants coupled with the slowdown in demand.

MoM dispatches
In January 2023 north-based cement mills dispatched 2.89Mt cement, showing an increase of 6.1 per cent against 2.73Mt dispatches in January 2022. Southern-based mills dispatched 1.113Mt cement during January 2023, which was 9.7 per cent less compared to the dispatches of 1.234Mt during January 2022. 

Northern-based cement mills dispatched 2.86Mt of cement in domestic markets in January 2023, showing an increase of 5.3 per cent against 2.712Mt dispatches in January 2022. Southern-based mills dispatched 730,703t of cement in local markets during January 2023, which was 4.9 per cent more than the dispatches of 696,468t in January 2022.

Exports from northern-based mills increased by 156.5 per cent as the quantities have risen from 13,727t in January 2022 to 35,215t in January 2023. Exports from the south reduced by 28.7 per cent to 382,852t in January 2023 from 537,279t during the same month last year. 

Cumulative dispatches
During 7MFY22-23 (July-January), total cement dispatches (domestic and exports) were 25.769Mt, which is 18 per cent lower than 31.42Mt dispatched during the corresponding period of the last fiscal year. Domestic dispatches during this period were 23.62Mt against 27.47Mt during the same period the previous year, showing a reduction of 14 per cent. Export dispatches were also 45.4 per cent less as the volumes decline to 2.15Mt during the first seven months of the current fiscal year compared to 3.94Mt exports during the same period of last fiscal year.

Northern mills dispatched 19.378Mt cement domestically during 7MFY22-23, showing a reduction of 15.29 per cent to cement dispatches of 22.88Mt during the July 2021-January 2022 period. Exports from the north increased by 10 per cent to 613,289t during July 2022-January 2023, compared with 557,615t exported during the same period last year. Total dispatches by northern mills reduced by 14.7 per cent to 19.99Mt during the first seven months of the current financial year from 23.433Mt during the same period of the last financial year.

Domestic dispatches by southern-based mills during July 2022-January 2023 period were 4.24Mt, showing a reduction of 7.8 per cent over 4.6Mt cement dispatched during the same period of last fiscal year. Exports from the south declined by 54.5 per cent to 1.54Mt during July 2022-January 2023, compared with 3.38Mt exported during the previous year. Total dispatches by the southern mills fell by 27.6 per cent to 5.78Mt during the first seven months of the current financial year from 7.983Mt during the same period of the last financial year.

APCMA remarks on cement dispatches
A spokesman of the APCMA emphasised the continued political instability over the last many months and its serious effects on the economy. He mentioned that the country is facing several challenges due to the non-opening of letters of credit for coal, spare parts and other consumable items required for the smooth running of the plants. Many containers laden with cement industry imported items have been held up at ports for want of letters of credit. The Pakistani government must ensure that letters of credit are opened on a timely basis to avoid any supply disruptions and closure of factories, said APCMA.