Pakistan cement sales are anticipated to grow by 10% MoM to 4.8mn tons with local dispatches likely to increase by 13% MoM which is due to seasonality amid resumption in construction activities post winters. However, on YoY basis, cement sales in Mar-2022 are expected to decline by around 11% YoY. Local dispatches are likely to be down by 2% YoY primarily due to slowdown in construction activity and increase in construction cost, we believe.

Exports during Mar-2022 are likely to witness a decline ~60% YoY, while they are likely to contract by ~19% MoM. The decline in exports is on back of global supply chain disruptions keeping the sea freight charges on a higher side.

In 9MFY22, cement sales are expected to fall by ~4% YoY with local sales anticipated to remain flat. Flattish trend in growth of local cement dispatches is on the back of 1) cut in Public Sector Development Program (PSDP) allocation, (2) rising construction cost, and (3) inflationary impact restricting the demand growth.

Industry utilization during Mar-2022 is anticipated to clock in at 83% with 9MFY22 average utilization of around 78%.

Looking forward, rising coal and commodity prices remain a key concern for the sector. Due to sharp rise in coal prices, industry has been using more Afghan, Local and Russian coal which is usually cheaper by 30-40% to the international Richard Bay coal prices. In this scenario, players in the North are better placed to avail the Afghan coal due to better availability and lower transportation cost.

Industry dispatches are likely to fall in April-2022 where the overall construction activity across the country remains dull in the month of Ramadan.

Courtesy – Topline Pakistan Research