Tuesday March 05, 2024

Cement sales fall in November amid winter slowdown

By Our Correspondent
November 29, 2023

KARACHI: Cement sales in November are expected to decline by 6-10 percent year-on-year and month-on-month, a report by brokerage Topline Research said on Tuesday.

The report said local cement dispatches are likely to decline by 4-8 percent month-on-month, mainly due to a slowdown in construction activities amid the onset of winter season and the implementation of axle load, which has hampered the transportation of cement.

The image shows a truck carrying sacks of cement.  — APP File
The image shows a truck carrying sacks of cement.  — APP File

On a year-on-year basis, local cement sales are down by 18-22 percent, attributed to the high base effect of last year when cement dispatches began rising after floods, and the high construction cost.

The report estimated that the average daily domestic sales for the sector are expected to clock in at 103.6 thousand tons per day in November, compared to the five-year average November sales of 124.1 thousand tonnes per day.

Exports during November are anticipated to increase by 3.8 times year-on-year, reaching 0.57 million tonnes, amid reduced coal prices and the devaluation of the rupee against the dollar, which has made exports more viable.

The report said the total cement capacity utilization in November is estimated to clock in at 56 percent, compared to 61 percent in October and 65 percent in November last year.

In the first five months of the fiscal year 2023-24, total cement sales are likely to increase by around 7-11 percent year-on-year, with local sales expected to remain flattish.

The report projected that local sales will slow down in the coming months due to the winter season, but anticipated that full-year cement dispatches will grow by 5 percent year-on-year to 42 million tonnes, led by improved farmers’ income, economic stability and expected decline in interest rate.

Similarly, exports are also expected to increase by 45 percent year-on-year to 6.5 million tonnes in the fiscal year 2023-24. This takes total cement dispatches to 48.5 million tonnes, up 9 percent year-on-year.

The report said the average retail price in November remained relatively flat at Rs1,187 per bag in the south, while it increased by Rs4 per bag to Rs1,211 per bag in the north, according to the Pakistan Bureau of Statistics. However, recently cement players have increased cement price by 50-80 rupees per bag to partially pass on the impact of axle load.