Having witnessed a rather modest beginning of the year, cement sales in the country picked up during the second month of FY15. The recently-released numbers from APCMA show a year-on-year increase of 25 percent for August, driven largely by sales in the North region.
An increase is expected this time of the year, given a lull in construction activities during the month of fasting (which was in July this year). Ali Amin, Research Analyst at KASB Securities, notes that sales have been driven mostly by private-sector led activity, as release of funds for government development projects has been going slow.
While the recent flooding in the provinces of Khyber-Pakhtunkhwa and Punjab (both of which constitute the North region) will put a drag on sales over the coming month, one notes that the hyped ‘loss in economic activity’ has not been as much as it was touted to be, as speculations of a ‘revolution-in-the-offing’ subsided. Remarkably, export sales, where the sector has been struggling, also picked up, registering growth of 64 percent month on month and 22 percent year on year.
Compared with the North, the South region seems to have made up for lower local sales with higher exports, where proximity to the port may have kicked exports via sea to markets in Africa. At the same time, declining demand from Afghanistan seems to be creating a challenging position for players up North.
This North-South difference in local versus export sales may help explain why capacity expansions are largely taking place in the former region, while dominant players in the South seek greener pastures abroad, reflected by Lucky Cement’s expansion plans in the Democratic Republic of Congo.
But, more importantly, this divide is also instructive in terms of regional differences in infrastructure development across the country. Indeed, this is an area that requires further inquiry, based on latest population metrics, increasing levels of urbanisation and political factors.
Comments
Comments are closed.