Pakistan experienced a partial growth in cement dispatches in FY23-24
The cement industry in Pakistan experienced a minor growth in cement dispatches in FY23-24 due to significant export volume. However, the sector recorded a 12.6 per cent decline in cement dispatches to local and overseas markets in the last month of the FY23-24, with 3.55Mt dispatched compared to 4.06Mt in the same period of the previous fiscal year. Local cement dispatches were 3.08Mt in June 2024, a decrease of 11.7 per cent compared to 3.48Mt in June 2023. At the same time, export dispatches also declined by 18 per cent from 576,309t in June 2023 to 472,865t in June 2024.
A spokesperson for the All Pakistan Cement Manufacturers Association (APCMA) emphasised the importance of the domestic market for the cement industry and called for serious attention from policymakers due to the decline in uptake during the fiscal year that ended on 30 June 2024. The spokesperson suggested the reduction of duties and taxes on cement, as the government had increased excise duty, which could further dampen demand. They highlighted that cement is a basic necessity, not a luxury item, and urged the government to take measures to reduce construction costs, making it more affordable for the masses.
According to Usama Rauf of AKD Securities Ltd, the decline in local sales during June is primarily attributable to fewer working days due to the Eid holidays. Meanwhile, the fall in exports is mainly due to a high base in the previous month amid higher clinker exports from the south. Overall, for the full fiscal year, local cement sales dropped to their lowest in the last seven years, totalling 38.2Mt amid an overall slowdown in construction due to elevated construction prices and higher interest rates.
Looking ahead, next year's local sales are expected to grow by a lower single-digit number as construction activity is expected to remain muted amid higher cement prices (following an increase of PKR100/bag (US$0.36) in FED on cement), increased taxes, and deteriorated farmers' income due to the recent wheat crisis.
Breaking down the statistics, northern cement mills dispatched 2.72Mt of cement in June 2024, a 7.7 per cent decrease from the 2.95Mt dispatched in June 2023. Southern mills dispatched 829,582t of cement in June 2024, marking a 25.5 per cent decrease from the 1.113Mt dispatched in June 2023.
FY23-24
In the full year, total cement dispatches (domestic and exports) were 45.291Mt, a 1.6 per cent increase from the previous fiscal year. Domestic dispatches totalled 38.181Mt, showing a reduction of 4.6 per cent, while export dispatches increased by 55.7 per cent to 7.11Mt. northern mills dispatched 31.55Mt of cement domestically, a 3.8 per cent reduction, while exports from the north increased by 36.2 per cent. Southern mills showed an 8.3 per cent reduction in domestic dispatches but a 61.7 per cent increase in exports. Total dispatches by southern mills increased by 14.5 per cent during the fiscal year.
