AIRLINK 74.00 Decreased By ▼ -0.56 (-0.75%)
BOP 5.02 Decreased By ▼ -0.04 (-0.79%)
CNERGY 4.42 Decreased By ▼ -0.04 (-0.9%)
DFML 39.20 Decreased By ▼ -0.53 (-1.33%)
DGKC 86.09 Decreased By ▼ -1.46 (-1.67%)
FCCL 21.65 Decreased By ▼ -0.28 (-1.28%)
FFBL 34.01 Decreased By ▼ -0.58 (-1.68%)
FFL 9.92 Increased By ▲ 0.17 (1.74%)
GGL 10.56 Increased By ▲ 0.07 (0.67%)
HBL 113.89 Increased By ▲ 0.10 (0.09%)
HUBC 135.84 Decreased By ▼ -0.68 (-0.5%)
HUMNL 11.90 Increased By ▲ 1.00 (9.17%)
KEL 4.84 Increased By ▲ 0.17 (3.64%)
KOSM 4.53 Decreased By ▼ -0.11 (-2.37%)
MLCF 38.27 Decreased By ▼ -0.19 (-0.49%)
OGDC 134.85 Decreased By ▼ -1.29 (-0.95%)
PAEL 26.35 Decreased By ▼ -0.26 (-0.98%)
PIAA 20.80 Decreased By ▼ -1.69 (-7.51%)
PIBTL 6.68 Increased By ▲ 0.01 (0.15%)
PPL 123.00 Increased By ▲ 0.71 (0.58%)
PRL 26.69 Decreased By ▼ -0.28 (-1.04%)
PTC 14.33 Increased By ▲ 0.42 (3.02%)
SEARL 59.12 Decreased By ▼ -0.75 (-1.25%)
SNGP 69.50 Decreased By ▼ -0.56 (-0.8%)
SSGC 10.33 Decreased By ▼ -0.02 (-0.19%)
TELE 8.50 Decreased By ▼ -0.04 (-0.47%)
TPLP 11.23 Decreased By ▼ -0.11 (-0.97%)
TRG 64.85 Decreased By ▼ -1.15 (-1.74%)
UNITY 26.25 Decreased By ▼ -0.08 (-0.3%)
WTL 1.34 Decreased By ▼ -0.01 (-0.74%)
BR100 7,851 Increased By 26.3 (0.34%)
BR30 25,337 Decreased By -69.2 (-0.27%)
KSE100 75,207 Increased By 122.8 (0.16%)
KSE30 24,143 Increased By 49.1 (0.2%)

After a positively dull FY19 and continued downstrends in the past few months, domestic demand in cement has witnessed an uptick in the month of September. Dispatches in the north zone during the month rose 20 percent against last year, that brought up the quarterly cumulatively by 9 percent for the region. Slight improvements in exports to Afghanistan and massive increase in clinker exports (read: “Exports: Barely rescuing cement”, Oct 11, 2019) by predominantly southern players all contributed to a 2 percent increase in total dispatches during the quarter against the period last year. In Sep, this cumulative increase was 12 percent. Is this a beginning of a turnaround?

While bears are still ruling the roost in the south zone which saw domestic dispatches decline by 32 percent in 1QFY20, demand has definitely picked up in the north zone. This is despite the austerity drive which has compressed commercial development demand, as well as the government's recent efforts to document. One of the measures taken is to introduce a conidtion to display national identify cards for any purchase and sales of goods above Rs50,000. Evidently, a lot of cement traded in the market is done by unregistered dealers. But September's growth shows that cement companies that were throughout last year competing heavily on prices due to shrinking demand may now be getting a breather as planned government projects kick off.

The south players are relying heavily on lower value clinker to overseas markets. In fact, exports originating in the south zone are 66 percent of all exports while clinker constitutes 41 percent of all exports going cross-border and overseas.

On that note, it is important to mention, that while exports to Afghanistan have grown against all odds, the increase is only making up for the closure of the Indian market for Pakistani cement. In 1QFY20, exports to Afghanistan grew 31 percent, with a major push that came in July and continued growth in the past three months.

Ultimately though, exports are still only 18 percent of all sales. Historically, there have been times when this had gone up to above 30 percent for the industry, and upwards of 40 percent for some companies. Exports-whether cement or clinker-fetch lower prices in the international markets which shrink margins for companies. Any major revival of the industry would depend on a swift and substantial shift in domestic demand which may come as PSDP funds are released, interest rates loosen up, and the Naya Pakistan Housing Plan begins construction.

Comments

Comments are closed.