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Wake me up when September ends; so the song goes. And it seems construction demand may have just woken up after a prolonged period of dismay as September came to a close. The switch seems to be coming from the north zone which up till now was doing particularly unwell with the forces of demand and price dynamics working against the market players. In Sep, dispatches grew 20 percent in the north zone, and prices have also started reviving (see graph).

Pakistan Bureau of Statistics surveys some markets to record prices of cement bags every week and average prices, it so seems, have grown 8 percent since May-19 and 4 percent in just the past month. In key cities such as Islamabad, Lahore and Peshawer, prices have increased by 6 percent in the past four weeks while in Multan, this rebound was 15 percent.

While its true that prices were falling since July, it seems September marked the beginning of an upward trajectory once again as evidently demand has improved. But it's the survival of the fittest for the cement industry, specially in the north where prices go down as swiftly as they come up and demand is visibly patchy as austerity is in full swing. Planned government and private projects are underway which is injecting demand into the industry but new projects are still not being swiftly signed on.

It is also specially critical for north players to play their best hands, since they have few other avenues to turn to, safe for shutting down their plants. Not only have they have raised capacity, their key markets such as Afghanistan and India cross-border have become inaccessible, particularly in the case of India which has shut down all trade with this side of the border. The growth in exports to Afghanistan of 31 percent during 1QFY20 is being offset by the closure of trade with India. Last year during the quarter, Pakistan exported 731,000 tons of cement to India and Afghanistan cumulatively -this year, its down to 643,000 tons exports to Afghanistan and none to India. This is concerning for an industry that relies on exports when the going gets tough. Right now, exports are being driven by the south players, mainly to overseas markets, and mainly in clinker-which is costlier.

Without any significant movement downward of interest rates, a boost in purchasing powers, consumption patterns and buying trends, and a turnaround in business confidence, expect the cement industry to remain on the brink, but just.