Cement sales improve by 3.5 percent

KARACHI: Boom in the construction and housing sector in the country has helped cement sales grew by 3.5 percent in the fiscal year ended June 30 and the upward trend in the sales would be maintained in the current fiscal year, as well, a local brokerage house reported on Friday.
The fiscal year 2015 recorded total sales at 35.4 million tonnes. "This was due to increase in the private sector expenditure on construction and housing," Nabeel Khursheed, an analyst at Topline Securities, said.
Besides, higher government infrastructure spending and improved security situation also helped increase cement sales during the year, he said.
Local sales posted stellar growth of eight percent on yearly basis in the year to reach 28.3 million tonnes, which were better than the average growth rate of five percent seen in the last five years, he said.
On month-on-month basis, total sales grew by nine percent to 3.3 million tonnes in June 2015.
Export dispatches were down 12 percent on yearly basis to clock in at 7.2 million tonnes. "This decline was attributed to decline in exports to Afghanistan, owing to competition from low price Iranian cement and political instability in the country," he said.
"Going forward, the demand from Afghanistan is likely to improve due to ease in political situation."
"We anticipate that the demand for cement in FY16 to improve further on the back of higher development spending (Rs1.5 trillion for FY16, up by 27 percent); initiation of projects due to Pak-China Economic Corridor; favourable macros (average GDP growth of 5.5 percent expected in the next three years); and lower interest rate scenario (multi-decade low of seven percent)," he said.
Additionally, higher disposable income, due to lower inflation (4.6 percent in FY15), will also boost the private sector expenditure on construction and housing, as evident from mega housing schemes launched by Bahria, Fazaia, DHA and the UAE's Emaar.
"Based on the above reasons, we anticipate Pakistan cement sales to rise by nine percent in FY16 to reach 38.6 million tonnes, while we expect export sales to remain flat at 7.2 million tonnes."