Pakistan’s Cement Sector Outlook remains Bright says expert despite nominal growth

With an uptick in construction activity expected, the outlook for the cement sector remains bright, says financial analysts despite the cement sector posted nominal growth in February 2021 as compared to February 2020.

The sector posted growth of 1.98 percent in February 2021 as compared to February 2020. Total cement despatches during February 2021 were 4.577 million tons against 4.489 million tons despatched during the same month of last fiscal year.

However, “with winter in the rearview, construction activity is expected to pick up while medium term outlook remains bright on the back of various incentives being provided to the construction industry,” says AKD Securities.

“Though political factors have put significant pressure on the cement sector and broader market lately, fundamentals of the sector remain strong and once political uncertainty subsides, we expect cement sector to again be among the frontrunners with players easily passing on the increase in cost coupled with demand remaining strong,” it added.

A number of cement producers have already announced expansion plans, as they expect strong demand in the near future.

Companies such as Kohat Cement Company, Maple Leaf Cement Factory and DG Khan Cement announcing expansions of 2.3-3mn tons, 2.4mn tons, and 2.7-3.6mn tons, respectively. “This has clearly spells a start of another expansion cycle as players look to prepare for forthcoming strong demand which is expected to take utilization to 97% by FY23 if more capacities are not added,” AKD Securities added.