Cement dispatches up 16.75 percent in August

LAHORE: Cement dispatches rose 16.75 percent to 3.585 million tons in August, official data showed on Tuesday.  

Total cement dispatches stood at 3.071 million tons recorded during the same month of last fiscal, showed the data by the All Pakistan Cement Manufacturers Association.  In August, domestic sales were 3.028 million tons as against 2.5 million tons in the same month a year earlier, showing a robust growth of 20.92 percent.

Cement sales in the north were 2.495 million tons in the month under review as compared to 2.034 million tons in the same month a year earlier. Local sales in the southern region were 0.532 million tons as compared to 9.47 million tons.

In the first two months of the current fiscal year, total domestic cement sales were 4.89 million tons as compared to 4.3 million tons during the same period last fiscal, showing an impressive growth of 13.83 percent.

Analysts said the domestic consumption posted growth even in July, despite Eid holidays that lasted for a week. Growth of domestic consumption in August was also robust as the consistent rains failed to affect the construction activities and newly launched infrastructure projects also boosted cement uptake, they added.

But, exports are continuously decreasing and during the first two months of the current fiscal, they went down to 1.022 million tons from 1.032 million tons in the comparable period. Exports to Afghanistan dropped to 346,928 tons during the first two months of FY17 as compared to 394,500 tons during the same period in FY16, showing a decline of 12.1 percent.

Cement exports through sea decreased 24.19 percent to 407,120 tons in July-August period.  However, increased exports to India offset the fall in exports to some extent. Cement exports to India increased to 268,230 tons in the two months as compared to 100,437 tons year ago.

Analysts said the cement manufactures have increased their production capacity in recent years to retain the market share on the reports of Chinese players’ entry, which could lead to price competition.

“One name which is in the news flows is Anhui Conch. It was one of the largest Chinese cement manufacturers, which has also disrupted the pricing mechanism in the Indonesian cement market, was on the news flows,” Insight Securities said in a sectoral report.

“The local industry fears that the new Chinese entrant could try to dominate the market through its competitive pricing and even clinch the majority of the China-Pakistan Economic Corridor related demand growth.”

The report said local cement players announced another 13 million tons capacity expansion to save their market share in the last 40 days. “In total, 23 million tons expansion plans have been announced (cumulative $2.5 billion investment) while another five million tons more cannot be ruled out,” it added.  The report said loss of the Afghanistan market is a matter of concern for the industry as subsidised Iranian exports marginalised Pakistani products.