The worst seems over for cement exports

There were two features that stood out in the latest cement dispatches data issued by the All Pakistan Cement Manufacturers Association (APCMA). First, that cement exports to India were back on the rise in March, and secondly, that March remains a key month for cement sales.
Previously, exports to India had been sliding, primarily due to lower margins in export sales. However, data for 9MFY13 show that sales to the eastern neighbour have definitely taken a leap with a 54 percent rise in March FY13 relative to the same month of last year.
Overall as well, export sales have performed well in the last two months, showing year-on-year increases bucking the trend witnessed in earlier months of this fiscal year.
Highlighting the March effect, industry experts explained that favourable weather in March over past few years has allowed construction work to commence earlier, thus boosting demand.
Local sales benefited from this effect, as is evident from month-on-month increase of more than 30 percent in sales during March. For the cumulative nine months this year, a 6 percent year-on-year increase was seen.
Industry experts are hopeful that the rise in exports will continue going forward, because of better export prices, and a devaluation of the rupee that has made exports more lucrative.
"Previously, local players shied away from export sales because of the lower prices in those markets, which made the margins more convincing as far as local sales go. That situation is gradually changing," said a representative from the industry.
Towards the end of January, exporters have raised prices of cement to Afghanistan by 25-35 percent, plausibly making export sales a more feasible option in February and March.
Going forward, growth in overall cement sales is expected to remain at the same trajectory of a 6-7 percent. The coming months-about mid-April to mid-May-will be exceptions whereby construction activity will be slowed down due to labour being engaged occupied in wheat harvest.

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Cement dispatches - Pakistan

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(mn tons)            9MFY13       YoY    March        MoM

                                           FY13

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Local                  18.4        6%       2.6       31%

North                  14.9        6%       2.1       34%

South                   3.5        5%       0.5     19.1%

Exports                 6.2       -1%       0.8       18%

Afghanistan             3.3     -1.5%       0.4       22%

India                   0.3      -32%      0.06       74%

Other, clinker (se      2.6        5%       0.4        8%

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TOTAL                  24.5        4%       3.3       27%

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Source: APCMA