According to the data released by the All Pakistan Cement Manufacturers Association, cement dispatches declined by 6.83 percent in September 2022. Total Cement dispatches during September 2022 were 4.276 million tons against 4.589 Million Tons dispatched during the same month of last fiscal year. APCMA adds that the industry’s local cement dispatches during September 2022 were 3.80 million tons compared to 4.01 million tons in September 2021, showing a decline of 5.33 percent. Exports dispatches also declined by 17.35 percent as the volumes reduced from 571,613 tons in September 2021 to 472,437 tons in September 2022.
In September 2022, North-based cement mills dispatched 3.26 million tons of cement, showing a decline of 8.34 percent against 3.56 million tons of dispatches in September 2021. South-based mills shipped 1.01 million tons of cement during September 2022, which was 1.58 percent less than the dispatches of 1.02 million tons during September 2021.
North-based cement mills dispatched 3.13 million tons of cement in domestic markets in September 2022, showing a decline of 9.08 percent against 3.45 million tons dispatches in September 2021. South-based mills dispatched 666,595 tons of cement in local markets during September 2022, which was 17.47 percent higher than the dispatches of 567,445 tons in September 2021.
Exports from North-based mills increased by 14.75 percent as the quantities rose from 110,245 tons in September 2021 to 126,502 tons in September 2022. Exports from the South reduced by 25.02 percent to 345,935 tons in September 2022 from 461,368 tons during the same month last year.
During the first three months of the current fiscal year, total cement dispatches (domestic and exports) were 9.613 million tons, which is 25.04 percent lower than the 12.825 million tons dispatched during the corresponding period of the last fiscal year. Domestic dispatches during this period were 8.599 million tons against 11.279 million tons during the previous year, showing a reduction of 23.76 percent. Export dispatches were also 34.44 percent less as the volumes reduced to 1.013 million tons during the first three months of the current fiscal year compared to 1.545 million tons of exports during the last fiscal year.
North-based Mills dispatched 7.258 million tons of cement domestically during the first three months of the current fiscal year showing a reduction of 23.46 percent to cement dispatches of 9.483 million tons during July-September 2021. Exports from the North declined by 25.53 percent to 288,712 tons during July-September 2022 compared with 387,667 tons exported during the same period last year. Total dispatches by North-based Mills reduced by 23.54 percent to 7.547 million tons during the first quarter of the current financial year from 9.871 million tons during the same period of the last financial year.
Domestic dispatches by South-based Mills during July-September 2022 were 1.341 million tons showing a reduction of 25.31 percent over 1.795 million tons of cement dispatched during the same period of last fiscal year. Exports from the South declined by 37.43 percent to 724,682 tons during July-September 2022 compared with 1.158 million tons exported during the previous year. Total dispatches by South-based Mills reduced by 30.06 percent to 2.065 million tons during the first quarter of the current financial year from 2.953 million tons during the same period as the last financial year.
A spokesman of the All Pakistan Cement Manufacturers Association expressed serious concerns over strict limitations on establishing a letter of credit by the State Bank for spare parts and other machinery. The government must immediately relax conditions for opening letters of credit as, without extra parts, cement factories will face difficulties running their operations.
Meanwhile, according to AKD Research, local cement dispatches for Sep ’22 clocked in at 3.80mn tons, up 31%MoM, however, declining by 5.3% on a YoY basis. Both the regions witnessed a rather strong month, with North and South increasing sales of 25%MoM and 67%MoM, respectively.
Overall for 1QFY23, damaged severely by monsoon and devastating floods, local sales have decreased by 24%YoY to 8.60mn tons, where local sales in the North have remained depressed at 7.26mn tons while sales in the South have witnessed a decline of 25.3%YoY.
Add to misery, Richard Bay coal prices are trading at elevated levels of US$259/ton while the FYTD average now stands at US$325/ton, while an effective standard of coal prices for FY22 stood at US$214/ton. Moreover, recent development also suggests that European countries are stockpiling coal to substitute natural gas for households during the winter season.
The analyst expects the sector to remain in the limelight as the recent bout of currency appreciation and a possible rate cut in policy could bring the cyclical industry into the mix again. Therefore, it is believed this would be a good opportunity to accumulate where once coal prices ease off, with the other fundamentals intact, the sector will be poised for good returns where our top picks are LUCK and MLCF.