KARACHI: As per the data released by All Pakistan Cement Manufacturer Association (APCMA), total cement dispatches for the month of January 2019 arrived at 3.65 million tons versus 4.08 million tons registered during the same month last year, exhibiting a decline of 11 percent YoY. “The fall in January 2019 dispatches was primarily due to continuation of lower dispatches in the Northern region (-21 percent YoY) whereas domestic dispatches in South also remained under pressure (-1 percent YoY) during the month,” Muhammad Ahmed at Pearl Securities said. Total local dispatches for the month clocked in at 3.07 million tons as against 3.74 million tons reported during January 2018, depicting a fall of 18 percent YoY. The hefty decline is mainly due to persistent weak demand in the Northern region where sales declined 22 percent YoY to 2.36 million tons during the month. However contrary to previous months where local sales remained strong in South, January 2019 local dispatches remained flat (-1 percent YoY) at 0.71 million tons.[the_ad id="32940"]On the export front, dispatches continue to display exponential improvement (+66 percent YoY) at 0.58 million tons during January 2019, primarily driven by Southern manufacturers who exported 0.36 million tons during the month (+224 percent YoY) and provided some support to the beleaguered volumes. “However, exports from North continue to decline (-8 percent YoY) at 0.22 million tons. The persistent rise in South exports is attributable to additional capacity available in the region post Attock Cement (ACPL), Lucky Cement (LUCK) and D.G Khan Cement (DGKC) expansion along with hefty PKR devaluation,” Pearl Securities report noted. With regards to cement dispatches during 7MFY19 (July-January 2018-19), total sales clocked in at 26.76 million tons (+2 percent YoY), with local sales and exports at 22.62 million tons (-4 percent YoY) and 4.14 million tons (+50 percent YoY), respectively. The subdued growth in overall dispatches during the period can mainly be attributed to depressed sales in the Northern region (local: -8 percent YoY; exports: -17 percent YoY) as lower development spending continues to impair local demand whereas decline in exports, particularly to Afghanistan (-22 percent YoY) has also hurt volumes. Industry’s capacity utilization during 7MFY19 reduced 11ppsYoY to 82 percent versus 93 percent in the same period last year. During January 2019, cement prices in North remained flat with Rs607/bag. However recently cement prices in the North have recorded a meager decline of Rs7.0/bag with average cement price in North hovering around Rs600/bag. Cement prices in South remained at Rs626/bag during January 2019. “Pricing discipline in South has so far remained intact as higher export volumes have catered to increased capacity,” Muhammad Ahmed said. Going forward, analysts expect local demand to remain lower, particularly in North as a trickle down impact of lower public sector spending impairs volumes. Furthermore, with the PKR devaluation, players operating in South have benefitted most due to exports, with Sri Lanka and Bangladesh as their favored destinations. Analysts expect this trend to continue as a weak PKR will provide cement players an opportunity to further enhance export volumes, thereby provide some respite to the falling volumes. China’s reluctance to consume coal dragging prices down Coal prices during January 2019 plunged 4.0 percent MoM to average $92/ton as against $95.70/ton in the prior month. The decline in coal price was mainly due to soft ban imposed by Chinese authorities on coal imports. “Currently, the prices are trading near $84/ton and we expect the downward trend to continue due to weak growth from China, which contributes 51 percent of overall world demand, as it looks to bank more on cleaner energy sources post winter season,” Pearl Securities report said.