Cement dispatches during the first half of this fiscal year show promising prospects for local dispatches in the domestic market. Total cement off-take improved by about 4 percent in 1HFY12 over 1HFY11, reaching nearly 15.4 million tons. On a year-on-year basis, while local dispatches for 1HFY12 increased by about 8 percent over 1HFY11, those for December 2011 increased by 14 percent over the same period last year. On a month-on-month analogy, the increase was considerably relative to November 2011. A low-base effect can explain both the year-on-year and month-on-month growth in dispatches. November 2011 had been a slow month for cement sales, owing partly to lesser working days during the month due to Eid holidays. Similarly, the Great Floods of 2010 had shadowed sales in FY11, particularly in the first half. Besides the low-base effect, industry sources also attribute the volumetric growth in local cement sales to a surge in housing schemes all over the country. "More so than an improvement in PSDP expenditures or infrastructural development, it is the boom in housing schemes that is helping the volumetric growth in local cement dispatches," said a professional in the industry. However, the export side continues to leave a lot to be desired. During 1HFY12, export dispatches fell by about 5 percent relative to the same period of last year. In December 2011 alone, the decline clocked in at 8 percent relative to December 2010. The decline in exports was mainly led by a fall in exports via sea, which may be attributed to the excess capacity and low prices prevailing in the GCC countries. Consequently, in 1HFY12, exports from the South declined by nearly 20 percent, while those from the north increased a wee bit relative to 1HFY11. In December 2011 alone, however, exports from the North dwindled more than those from the South relative to December 2010. A slump in exports to Afghanistan can partly explain the monthly decline, which has been further linked to extreme weather conditions that hinder easy transport of the product. Industry sources claim that better price in the local market is also acting as a disincentive for manufacturers to sell in export markets. India is the only export destination that has depicted improvement in both 1HFY12 over the same period last year, as well as in December 2011 over November 2011 and December 2010. But exports to India didn help improve the net export dispatches much. Overall, cement export in 1HFY12 declined around 0.2 million tons over 1HFY11. Going forward, local dispatches are expected to continue the rising trend of volumetric growth, especially since improvement in PSDP expenditures are expected owing to election times drawing closer. However, January 2012 is likely to be a tricky month because of the sever winters in the country. Exports, on the other hand, are not likely to show an improvement, with optimism regarding exports to Afghanistan also waning away.
===================================================== CEMENT DISPATCHES - PAKISTAN ===================================================== (mn tons) 1HFY12 YoY Dec FY12 MoM ===================================================== Local 10.9 8% 2.0 24% North 8.9 6% 1.7 22% South 2.0 19% 0.4 31% Exports 4.5 -5% 0.6 -18% Afghanistan 2.5 10% 0.4 7% India 0.4 63% 0.05 15% Other, clinker (sea) 1.6 -27% 0.2 1% TOTAL 15.4 4% 2.7 19% ----------------------------------------------------- Source: APCMA =====================================================
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