AIRLINK 74.00 Decreased By ▼ -0.25 (-0.34%)
BOP 5.14 Increased By ▲ 0.09 (1.78%)
CNERGY 4.55 Increased By ▲ 0.13 (2.94%)
DFML 37.15 Increased By ▲ 1.31 (3.66%)
DGKC 89.90 Increased By ▲ 1.90 (2.16%)
FCCL 22.40 Increased By ▲ 0.20 (0.9%)
FFBL 33.03 Increased By ▲ 0.31 (0.95%)
FFL 9.75 Decreased By ▼ -0.04 (-0.41%)
GGL 10.75 Decreased By ▼ -0.05 (-0.46%)
HBL 115.50 Decreased By ▼ -0.40 (-0.35%)
HUBC 137.10 Increased By ▲ 1.26 (0.93%)
HUMNL 9.95 Increased By ▲ 0.11 (1.12%)
KEL 4.60 Decreased By ▼ -0.01 (-0.22%)
KOSM 4.83 Increased By ▲ 0.17 (3.65%)
MLCF 39.75 Decreased By ▼ -0.13 (-0.33%)
OGDC 138.20 Increased By ▲ 0.30 (0.22%)
PAEL 27.00 Increased By ▲ 0.57 (2.16%)
PIAA 24.24 Decreased By ▼ -2.04 (-7.76%)
PIBTL 6.74 Decreased By ▼ -0.02 (-0.3%)
PPL 123.62 Increased By ▲ 0.72 (0.59%)
PRL 27.40 Increased By ▲ 0.71 (2.66%)
PTC 13.90 Decreased By ▼ -0.10 (-0.71%)
SEARL 61.75 Increased By ▲ 3.05 (5.2%)
SNGP 70.15 Decreased By ▼ -0.25 (-0.36%)
SSGC 10.52 Increased By ▲ 0.16 (1.54%)
TELE 8.57 Increased By ▲ 0.01 (0.12%)
TPLP 11.10 Decreased By ▼ -0.28 (-2.46%)
TRG 64.02 Decreased By ▼ -0.21 (-0.33%)
UNITY 26.76 Increased By ▲ 0.71 (2.73%)
WTL 1.38 No Change ▼ 0.00 (0%)
BR100 7,874 Increased By 36.2 (0.46%)
BR30 25,596 Increased By 136 (0.53%)
KSE100 75,342 Increased By 411.7 (0.55%)
KSE30 24,214 Increased By 68.6 (0.28%)

Cement prices have recovered, now trailing the same levels as they were this period last year. They have come back full circle after being volatile for the better part of the past 12 months. During FY19, demand was tumbling down as the economy slowed down and government spending dried up. For the past four months, demand seems to be showing signs of some recovery without too much changes on the economic front—but only in the north zone. In the 4MFY20 period, dispatches have grown 11 percent cumulatively. How permanent is this growth is the obvious next question.

Analysts believe this may be a temperory relief coming from private sector projects in housing which have recently kicked off, gains of which are being enjoyed primarily by three players: Maple Leaf Cement, Cherat Cement, and DG Khan Cement. Aggressive marketing and positioning to markets after expansions at more affordable price points than many players located in the south is allowing growth amongst these players. However, it is evident that more projects are picking up in Punjab and up, compared to the South. One reason associated to this is that Punjab government is more active in improving regulatory environment for private sector projects than other provinces have been.

If private sector projects keep rolling in, demand will keep improving, though a major recovery will be more equilateral across the industry if public spending catches up. The government has recently released PSDP funds to the tune of Rs37 billion which are already planned projects related to CPEC. However, the recent CNIC requirement from agents and wholesalers of transactions—most of whom operate informally—may curb demand in upcoming months as they will stop likely stop buying instead of becoming formal.

As for the major expectation last year that Naya Pakistan Housing Program (NPHP) will soon start constructing houses which will provide much needed impetus in the construction industry so far remains unrealized. Last week, the government announced it would be giving a subsidy for NPHP which indicates the plan is still in the works. But going into the bidding process, identifying developers, and thereon, finalizing construction plans and getting into procurement may take another 6 months or so to actually bear fruit.

Comments

Comments are closed.