Pakistan's cement industry exhibits a mixed performance in May 2024
The All Pakistan Cement Manufacturers Association (APCMA) data reveals a mixed performance in May 2024 when the country’s total cement dispatches increased by 7.8 per cent to 4.275Mt in May 2024 from 3.965Mt dispatched during the same month of previous financial year. However, YoY local cement dispatches declined by 2.2 per cent, while exports surged by 72.2 per cent. This significant increase of overseas shipments, from 533,215t in May 2023 to 917,96t in May 2024, not only indicates a promising potential for export growth but also provides a strong reason for investors to feel confident in the industry’s future.
The MoM growth in domestic cement off-take can be attributed to the low sales figures from the previous month due to the Eid holidays. However, the YoY decline is likely due to a slowdown in construction activities, driven by higher construction costs and elevated borrowing rates. However, exports have been growing continuously thanks to reduced coal prices, improved global demand and easing inflation. In addition, southern cement players are contributing to this growth by exploring new export markets to increase their capacity utilisation, remarked Usama Rauf of AKD Securities Ltd. Overall, FY23-24 total cement sales are expected to end with the previously estimated 3-5 per cent annual growth driven by exports.
In May 2024 northern cement mills dispatched a total of 2.915Mt of cement, an increase of 1.4 per cent compared to 2.876Mt of dispatches in May 2023. South-based mills dispatched 1.359Mt of cement during May 2024, up 24.9 per cent from 1.089Mt in May 2023.
Northern cement mills dispatched 2.753Mt of cement in domestic markets in May 2024, a decline of 0.4 per cent compared to 2.765Mt in May 2023. South-based mills dispatched 604,672t of cement in local markets during May 2024, 9.3 per cent less than the 666,867t in May 2023.
Exports from northern mills increased by 46.1 per cent from 111,511t in May 2023 to 162,929t in May 2024. Exports from the south also increased by 79 per cent to 755,033t in May 2024 from 421,704t during the same month last year.
Cumulative dispatches
In the 11MFY23-24 (July 2023-May 2024) total cement dispatches were 41.73Mt, three per cent higher than the 40.516Mt dispatched during the corresponding period of the previous fiscal year. Domestic dispatches in this period were 35.097Mt compared to 36.526Mt in the 11MFY22-23, a reduction of 3.9 per cent. Export dispatches were up 66.3 per cent as the volumes increased to 6.633Mt in the 11MFY23-24 compared to 3.99Mt of exports in the equivalent year-ago period.
Northern mills dispatched 28.931Mt of cement to the domestic market in the 11MFY23-24, showing a YoY reduction of 3.1 per cent from 29.921Mt. Exports from the north increased by 38.5 per cent YoY to 1.349Mt in the July 2023-May 2024 period from 0.974Mt exported during the same period in the previous financial year. Total dispatches by northern mills were reduced by two per cent YoY to 30.28Mt in 11MFY23-24 from 30.896Mt.
Domestic dispatches by southern mills during July 2023-May 2024 were 6.166Mt, showing a reduction of 6.6 per cent over 6.605Mt of cement dispatched during the same period of last fiscal year. Exports from the south increased by 75.2 per cent to 5.284Mt during July 2023-May 2024 compared with 3.015Mt exported during the previous year’s period. Total dispatches by southern mills increased by 19 per cent to 11.450Mt during the 11FY23-24 from 9.62Mt in the last financial year.
APCMA points of serious concern
A spokesman for the APCMA said that a healthy export increase is a good omen. However, the industry largely depends on the domestic market to reach its potential. It is a matter of serious concern that the cement sector continues to post negative growth in local dispatches for the ninth straight month. APCMA is very hopeful that the government will give due attention to the concerns of the cement industry in the upcoming budget. “We have an almost one-third idle capacity, which, if utilised, can bring our operational costs down and provide relief to the end consumers,” he added.
