Though, May numbers indicate cement dispatches dropped 36 percent amid intermittent lockdown across major cities, COVID-19 cases piling up and a seasonal reduced trend due to Ramadan and Eid; cumulatively, in 11MFY20, the drop (0.3%) was insignificant. Cement industry had started recovering from a downturn which means it was recording positive growth rates since July.

Things were in fact a lot rosier even uptil March (9MFY20: 7% growth) as the country was recording its first cases of the coronavirus and sheer gloom had not set in yet. Though cement plants are operating across the country now, and factories are opening back up as the government decides to step back from any form of lockdown and adopt a "see where it goes" approach, brokerage houses believe this could mean a grand recovery for cement demand as well.

Not only will the construction policy announced by the PM yeild new construction and development projects, under the Naya Pakistan Housing Program, new housing schemes will spur demand as well. Though the target for 5 million housing supply seems too far fetched now, even impossible, increment housing supply projects would boost the existing lull that is being witnessed in the housing sector.

Analysts believe as the pandemic recedes, both cement demand and prices would improve. For cement companie, profitability would return as low energy costs and low borrowing rates will keep expenditures in control while higher demand and prices would boost the topline.

However, the current herd immunity strategy of the government where everybody is responsible for themselves and the government does not want to restrict any mobility; death and devastation could be much higher and the suffering more prolonged. It should also be remembered that the lockdown and the virus itself has reduced consumers appetite for spending and has reduced incomes in many cases. It will take some time for incomes and purchasing powers to resurface.Tying up cash in construction or a significant purchase like home buying could be a big ask when economic climate is so uncertain.

For the cement industry, any optimism should be taken with a grain of salt. Government spending (or lack thereof) on development, and private sector (both from the developer and the consumer perspective) participation in housing schemes will determine domestic demand coming FY21.