Despite massive under utilisation of PSDP funds during FY13 so far, cement dispatches in the country have stayed firm. Recall that the PSDP funding went beyond 100 percent of the total allocation in FY12, whereas for 10MFY13, the PSDP release has so far been only 57 percent.
According to All Pakistan Cement Manufactures Association (APCMA), total cement sales clocked at 27.7 million tons for 10MFY13, nearly four percent higher year-on-year. Local sales went up by six percent year-on-year, mainly on account of an uptick in construction activities. Exports on the other hand, remained modest, having witnessed phenomenal growth earlier this year, down a mere one percent year-on-year.
The news making rounds these days is that cement dispatches dropped slightly in May due to the newly imposed axle load limitation on trucks which reduced the quantum of cement transported. How big the impact of the load limit is will be known better shortly, since single month data is not enough to point out such nuanced reasoning behind the slowdown in cement sales.
The future seems to be on the brighter side as PML-N assumes power. The market is highly optimistic that PML-Ns track record of fast-tracking infrastructure development projects injects a ray of hope that cement sector will benefit in the near to long term. The emphasis on hydel power gyration as laid in the PML-N manifesto could also provide the much needed impetus, as construction of small and medium sized dams would spur local demand.
Moreover, the PSDP allocation for FY14 is expected to be on the higher side, as news of Rs450 billion been allocated to PSDP is becoming the talk of the town. From what it seems, there is fresh hope amongst the market players that an expected surge in local cement sales would do enough to make up for any losses in cement exports to Afghanistan and India.
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