The fiscal year so far has been shaping up to be one that would put the cement industry much ahead of not only its somber performances in recent years, but of industries too. After years of relying on overseas shipments to keep the kilns firing, the charge is now being led by a rebound in domestic demand. In 8MFY26, offtake marks an 11 percent growth, with exports grew a modest 6 percent; falling back to 18 percent of the market share (down from 20% in FY25).
The surge in domestic demand—of 12 percent—has pushed average monthly domestic demand to 3.56 million tons, which is a significant recovery from the 7-year lows seen in FY25. Current offtake is still not comparable to the peak years of FY21 and FY22 but it is slowly coming close.
The only problem is that the industry capacity has ballooned since then. In FY26, the industry is sitting at an 8-month capacity of 58 million tons, which is roughly 22 percent higher than the capacity in FY21 and FY22.
READ MORE: BR RESEARCH: Cement: Domestic demand reclaims lead
Therefore, even as the growth revival is comforting, the distance from the peak is steep. The sector has a long way to go as current capacity utlization, despite an uptick, at 60 percent, is only just coming out of the trenches. For context, the cement industry at current levels is 26 percent away from it’s the utilization levels in FY21.
The current uptick will form a vital lineline for producers. In domestic markets, cement producers have strong pricing power compared to a more competitive environment abroad. This rebalancing is when cement makers optimize their earnings.
What remains to be seen however is how global coal prices impact domestic cement dynamics. The Middle East war sent coal prices hurtling to their highest levels in over a year.
For local cement makers, the opportunity to pass on the rising costs to the consumers remains available, a major shift in energy costs will cause disruptions;and the damage will depend on the length of said disruption.
Cross-border tensions with Afghanistan will remain a sensitive point that has also been complicating logistics at the northern export route. Despite regional military friction, and safe for a major macroeconomic upheavel, domestic demand for cement for the rest of the year and the coming year will be nudged by subsidized mortgages and a promised construction package for builders to restart their stalled projects.
As far as quick fixes and economic optics go, this is the most ready (and readily used) card available to any Pakistani government; and they won’t shy away from using it.
It’s the perfect short-term gain for structural pain kind of policy that we have come to be familiar with. But for construction material producers, it gives just the boost needed to get utilization levels up.
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