Cement dispatches are likely to rebound in August 2023

While Pakistani cement dispatch data for August 2023 is yet to be released by All Pakistan Cement Manufacturers (APCMA), Topline Securities has forecast that local cement dispatches will increase by 19-23 per cent YoY in August 2023 due to low base effect in the corresponding period. 

An analyst said today that total cement sales during August 2023 are anticipated to increase by 23-27 per cent YoY and 26-29 per cent MoM. Local dispatches will likely rise by 19-23 per cent YoY and 25-29 per cent, respectively, MoM.

FY23-24 began on shaky ground as sales were lower in July 23 due to rainfall in most parts of the country. However, sales are expected to rebound in August 2023 with an MoM increase of 27 per cent to 3.5Mt, attributed to the low base effect. The country was affected by floods last year, hampered construction activities in July-Aug 2022.

Cement export
Exports in August 2023 are expected to increase by 53 per cent YoY and 36 per cent MoM, reaching 0.59Mt, owing to lower coal prices and a substantial devaluation of Pakistani rupee against the greenback. Low coal prices and PKR devaluation will maintain elevated export numbers.

In 2MFY23-24 (estimated), cement sales are expected to increase by around 35-39 per cent YoY, with local sales also posting a 29-33 per cent YoY jump. A sizeable increase in sales is due to the low base effect last year. 

Price of cement bag
The pricing arrangement among the players has been favourable so far, allowing the sector to generate significant profits despite low utilisation levels. According to the Pakistan Bureau of Statistics (PBS), the average retail price in August 2023 was PKR1149/bag (US$3.81/bag) in the north and PKR1166/bag in the south, marking a 1.7 per cent MoM increase in the north while prices south remained unchanged.

The skyrocketing construction input prices and a tight monetary environment will likely keep cement sales flattish in FY23-24. Moreover, we also believe margins will remain stable in FY23-24 due to firm prices, said an analyst.