According to a report by Topline Securities on Saturday, Pakistan’s total cement sales are expected to decrease by 25-29% MoM in April 2023, amounting to 2.7-2.9 million tons due to the Eid holidays, economic slowdown, and lower construction activity during Ramadan.
The report indicates that local dispatches are likely to decrease by 28-32% MoM and 19-23% YoY, mainly due to the severe hike in interest rates, increasing construction costs, and political instability discouraging investors in the construction sector.
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In the first 10 months (July – April) of the 2022-2023 fiscal year, the cement industry sales are expected to fall by 18% YoY, with local sales posting a decline of 17% YoY. However, exports during April 2023 are expected to increase by 175% YoY, though declining by 2% MoM to reach 0.43 million tons. The report suggests that export sales for the first ten months of the fiscal year will likely decline by 26-30% YoY due to global economic slowdown and uncompetitive export prices caused by higher domestic production costs.
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Industry utilization during April 2023 is expected to clock in at 44%, with the July – April 2022-2023 average of around 58%. The report estimates that the average daily sales in the North and South regions will be 85k tons/day and 18k tons/day, respectively. The Pakistan Bureau of Statics (PBS) reported that cement retail prices in April 2023 averaged at Rs1,102/bag in the North, a minor increase from March 2023. In the South, average cement prices clocked in at Rs1,166/bag, with an increase of Rs8/bag from March 2023.
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Overall, the report suggests that the cement industry in Pakistan is facing significant challenges due to the economic slowdown, rising costs, and political instability. It is recommended that the industry take necessary steps to stabilize the market and improve conditions to promote growth and investment in the sector.
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