The latest data released by the All Pakistan Cement Manufacturers Association (APCMA) show that not only is the overall sector enjoying better margins locally owing to better retention prices at home, but cement sales in terms of volumes are also improving locally. With a growth of 7 percent, year on year, to 14.8 million tons during 8MFY12, local sales volumes showed a healthy growth in both the northern and southern region, though on a month-on-month basis, local dispatches fell marginally owing to the winter effect which continued through February. Several factors could account for the improvement in local sales volumes this fiscal year vis-à-vis the previous one. First, post-flood reconstruction after the floods both this year and the previous one have pricked up pace, explaining partly the uptick in local sales. Secondly, an overall increase in construction activities is also claimed to be a significant factor by industry professionals, particularly as far as house building is concerned. In fact, the current year being an election year, cement players also deem it likely that the government will increase its PSDP expenditures, further brightening prospects for the industry. The export front, however, is not as rosy with overall export volumes falling both on a year-on-year and month-on-month basis. In particular, exports via sea have been declining significantly this year, with the northern regions contribution to sea exports nearly negligible. Lower margins in main GCC markets and excess capacity in some GCC countries explain the dull momentum of export sales this year. Even though prices in these areas have started improving recently, the impact on Pakistans export sales is yet to be seen. Recently, Saudi Arabia has relaxed its cement import ban, lending some hope regarding exports via sea. However, because some GCC countries such as Dubai and Egypt are already sitting on excess capacities, the prospects of Pakistani exports being boosted appear dim as therell be more feasible options for Saudi Arabia to import from. As far as exports to India and Afghanistan are concerned, northern players are pursuing these markets persistently. However, February FY12 has seen a decrease in dispatches to the two countries, plausibly because of a prolonging of the winter season which hinders transport of the product. There are expectations that the road route for exports to India may be opened up by April this year. And though that will help improve export dispatches to some extent, not a significant breakthrough is expected in the overall sales to the country because of this development alone. Consequently, prospects for exports do not appear to be getting a remarkable uplift any time soon. As for local sales, there are expectations of improving dispatches, with some industry professionals claiming that the net year-on-year increase this year could be as high as 10 percent.
===================================================== CEMENT DISPATCHES - PAKISTAN ===================================================== (mn tons) 8MFY12 YoY Feb FY12 MoM ===================================================== Local 14.8 7% 1.9 -1% North 12.0 6% 1.5 0% South 2.8 14% 0.4 -4% Exports 5.6 -6% 0.6 -4% Afghanistan 3.0 7% 0.3 12% India 0.4 39% 0.04 -15% Other, clinker (sea) 2.2 -23% 0.3 -16% ----------------------------------------------------- TOTAL 20.5 3% 2.5 -1% ----------------------------------------------------- Source: APCMA =====================================================
Comments
Comments are closed for this article.