Pakistan’s cement industry closed FY26 on a firmer footing. Total dispatches reached 50.58 million tons, up 7.6 percent from 47 million tons in FY25. This was the strongest volume performance in several years and the second consecutive year of growth. More importantly, the recovery came from where producers would prefer it to come: the domestic market.
Local dispatches rose 10 percent to 41.57 million tons, adding nearly 3.8 million tons during the year. Exports, which had kept plants running while domestic construction remained in the trenches, declined 2.1 percent to 9.01 million tons. Their share in total dispatches consequently fell to around 18 percent from nearly 20 percent last year.
This marks an important shift in the sector’s sales mix. Between FY22 and FY25, high interest rates, inflation, weak household purchasing power and cuts in development spending brought construction activity to a standstill. Producers increasingly turned abroad, even though exports generally offer weaker prices and carry higher freight and handling costs. In FY26, the local buyer finally returned.
The regional numbers show where the recovery came from. North-based dispatches increased 7.5 percent to 35.5 million tons, driven by an 11 percent increase in domestic sales. Northern exports, however, more than halved to 0.78 million tons as the closure of the Afghanistan border disrupted cross-border shipments. South-based dispatches grew 7.8 percent to 15.08 million tons. Domestic sales in the south increased 6 percent, while exports rose 9 percent to 8.24 million tons, supported by access to seaborne markets.
June provided a strong finish, although the numbers come with a low-base caveat because Eid holidays had fallen in June last year. Total dispatches increased 18.4 percent year-on-year to 4.33 million tons and were also 13 percent higher than May. Domestic sales surged 27 percent to 3.54 million tons, while exports declined 9 percent to 0.79 million tons.
The north recorded no exports during June because of the Afghan border closure, but local dispatches increased 27 percent to 3.02 million tons. In the south, total dispatches rose 23 percent to 1.31 million tons. Local sales increased 28 percent, while exports grew 20 percent to 0.79 million tons. Capacity utilisation stood at 61 percent during the month, with a stark regional divide: 54 percent in the north and 90 percent in the south.
June’s utilisation rate may look encouraging, but the full-year picture remains less flattering. The industry has close to 80 million tons of installed capacity. Even after dispatches crossed 50 million tons, more than one-third of that capacity remained idle. Years of aggressive expansion have left the sector with a capacity overhang that one year of recovery cannot resolve.
The outlook for domestic demand remains cautiously positive. Lower interest rates, improving economic activity, housing incentives and tax relief for property transactions should support private construction. The FY27 budget has also raised the federal development allocation to Rs1 trillion, while the PM Apna Ghar scheme could generate incremental housing demand. On this basis, industry dispatches are expected to grow another 7–8 percent in FY27, potentially reaching 54–55 million tons.
But much will depend on execution. Budgeted development spending has a habit of being cut when fiscal pressures emerge, while household affordability remains weak. Higher fuel prices and renewed inflation could also delay construction decisions and slow the recovery.
The export outlook is more divided. Southern producers should continue to benefit from access to diversified markets across Asia, Africa, the Middle East and the United States. For northern producers, the reopening of the Afghan border will be critical—not only for restoring exports but also for regaining access to cheaper Afghan coal. Without it, exports are likely to remain subdued and northern plants will become even more dependent on domestic demand.