Demand in the cement industry is on a revival path, this time driven by domestic markets, rather than exports that are dragging down growth at this moment.
Last year, exports were doing the heavy lifting contributing more than 20 percent to the sales mix as domestic markets remained taciturn.The dark clouds over local demand is now lifting with exports taking a back seat once again; though definitely not deliberately.
In the first half of the current fiscal year, total cement offtake according to the All Pakistan Cement Manufacturers Association are recorded at 25.8 million tons, a growth of 10 percent year on year.
Cumulative domestic demand offtake is up 14 percent, and more importantly, the average monthly domestic dispatches have risen to around 3.5 million tons, compared to 3.1 million tons during the same period last year. This matters because demand growth is no longer being driven by one-off spikes or exports volataility, but a steadier baseline of consumption.
While still well short of highs seen during FY21, the cadence of domestc demand represents a surefire recovery in construction demand led by public and private projects.
The drag is coming through from exports. After acting as the industry’s short absorber for much of the past two years, export shipments have begun their retreat. Export volumes over 6MFY26 fell 4 percent, pulling the export down down to 18 percent—still higher than the decade’s average of 15 percent, but much lower than last year’s peak share of 21 percent. Part of this is due to the disruptions at the Afghan borders where political instability has once again constrained cross border trade flows. North players in fact sent out no cement exports during the month of December. Compared to last year, December’s export dispatches fell by 21 percent.
The current cumulative growth is in line with expectations that the sector will grow 8-10 percent this year with a potential to record higher growth rates in FY27 with monetary easing and demand recovery in the development sector. Public sector development is stabilizing after years of disruption, while private sector construction is hoped to cautuously reawaken as government’s tax and subsidy policies kick in. A subsidized mortage scheme is back on the table which could be utilized for first-time home owners. However, given its limited scope (read: “Déjà Vu in 5 Marlas”, Oct 22, 2025), it might not create a large enough momentum in the property market. But any pick up in new homeowners entering the market would benefit domestic cement consumption.
Strong local demand is also the biggest anchor for cement manufacturers and as they consolidate, their pricing power legitimizes. Perhaps the only concern that remains is the low capacity utilization, which is growing but slowly. Even with higher volumes, utilization remains barely above the mid-50 percent mark, far below historical normal. The expansion cycle that peaked around FY23 has left the sector structurally long on capacity and shrinking exports only tighten that constraint. Exports will have to circle back for utilization to revert. For now, the cement sector is stabilizing on narrower but firmer ground. A shift back toward domestic demand is a healthier foundation for the industry, and recent acquisitions and expansion plans by several leading manufacturers suggest that this recovery is credible enough to attract long-term capital.
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