KARACHI: Pakistan’s overall cement dispatches for the month of Nov-2019 increased by 11% YoY to 4.35mn tons as compared to 3.90mn tons in the same month last year.
Double-digit growth in cement dispatches is mainly on the back of 44% YoY jump in cement exports, whereas local dispatches rose by 6% YoY during the month.
Moreover, looking at the data for region-wise local cement dispatches, the growth in local dispatches was solely on the back of 13% YoY increase in the north, whereas local dispatches in the south receded by 20% YoY.
However, one should not read too much in the disparity in local dispatches between north and south regions, rather this number should be looked in totality, given that Maple Leaf (MLCF) and other north-based players have gained market share in the south, leading to lower local dispatches from south-based players.
On the other hand, as usual, most of the growth in overall cement exports came from the southern region, where exports recorded impressive growth of 68% YoY, compared to 5MFY20 (July-November 2019) growth of 39% YoY for south-based exports.
For the 5MFY20 period, cement dispatches posted 6% YoY growth to 20.46mn tons, compared to 19.25mn tons in the same period last year.
Demand for cement could remain robust for the coming months, owing to improving economic scenario whereas any rise in development expenditure or housing plans will result in additional stimulus for the sector, if in fact they do materialize, a report issued by JS Global Capital notes.
Looking at prospective dispatches on a company-wise basis, analyst expect Maple Leaf Cement (MLCF) to record the highest growth in dispatches at 83% YoY during November.
Growth for the company is solely on the back of 93% YoY expected growth in its local dispatches, which will effectively take the company to third position in local dispatches with 479k tons expected in November, behind only Bestway Cement (BWCL) and DG Khan Cement (DGKC) and replacing Lucky Cement (LUCK) in the process. Cherat Cement (CHCC) is expected to follow in terms of growth with 67% YoY expected during the month.
For players in North, weakening demand coupled with oversupply and stressed export avenues are casting a shadow on price which currently stand around ~PkR503/bag, coming down from a high of PkR550/bag while discounts from players have also increased.
Going forward, a analysts expect prices to remain weak for the next six to eight months, after which some improvement cannot be ruled out.