Pakistan's local cement dispatches are likely to fall 24-26 per cent YoY and 32-34 per cent MoM to clock in at around 2.08Mt in July 2024. This was roughly estimated by BMA Capital Management Ltd, which further adds that local cement dispatches on a YoY basis are down due to a slowdown in construction activities courtesy of higher cost of construction, plus muted government spending on infrastructure due to fiscal constraints, as well as the implementation of axle load.
Furthermore, the MoM decline is due to budgetary measures taken by the government related to the construction/cement industry. According to industry information, sales have been severely impacted by a significant price hike and a strike by cement dealers against taxes.
Considering the above sales figures, the sector's average daily domestic sales are expected to be 71,600tpd for July 2024, lower than the last five-year average July sales of 97,000tpd.
The All Pakistan Cement Manufacturers Association data has yet to be released, and it has to be seen when the BMA Capital reports Allen with official data.
Exports
Exports during July 2024 are anticipated to increase by 22-24 per cent YoY and 16-18 per cent MoM at 0.55Mt. This growth in exports is mainly due to higher exports from southern industry players. This brings Pakistan's total cement sales to around 2.63Mt in July 2024, down 18-20 per cent YoY and 25-27 per cent MoM. Total cement capacity utilisation in July 2024 is estimated to be 38 per cent versus 52 per cent on June 2024 and 47 per cent on July 2023.
According to the Pakistan Bureau of Statistics (PBS), the average retail price in July 2024 increased by PKR199(US$0.71)/bag YoY and PKR 345/bag YoY to PKR1366/bag and PKR1476/bag in the south and north, respectively.
Outlook
Local cement demand is expected to recover in FY24-25 owing to the higher amount allocated for the Public Sector Development Program (PSDP), which eases inflationary pressures and declines interest rates. However, recovery is likely to be modest, given the rise in cement prices, which offsets the impact of the increase in FED by PKR100/bag. Growth in exports will support total cement dispatches.
