Cement dispatches likely to increase by 5% in Q2 of FY14

Cement dispatches likely to increase by 5% in Q2 of FY14

KARACHI: The ongoing quarter (October-December) of fiscal year 2013-14 (FY14) has been anticipated to observe an increase in cement dispatches by 5.13 percent to 8.2 million tonnes as compared to 7.8 million tonnes in the first quarter of FY14, said an analyst.
According to Invest Cap’s analyst report, local cement dispatches would post a massive growth of 14 percent on quarterly basis, however, export will register a decline of 16 percent in the second quarter FY14. 
On monthly basis, total dispatches grew 4.0 percent on monthly basis to 2.85 million tonnes during December 2013 as against 2.73 million tonnes in November 2013, he added.
However, on yearly basis the same grew by a minimal 1.0 percent. Local dispatches for December 2013 are estimated to reach a level of 2.24 million tonnes, posting a 5.0 percent monthly increase with country’s northern region taking the lead with 1.9 million tonnes of dispatches, up 5.0 percent on monthly basis and 1.0 percent on yearly basis, and southern region sharing the rest, up by 3.0 percent on monthly basis, said the analyst.
The analyst further stated in a report that total cement volumes are expected to touch 16 million tonnes during the first half (July-December) of FY14 as against 15.9 million tonnes recorded during first half of FY13.  The capacity utilisation is estimated to remain at 69 percent during the first half of FY14, the analyst added.
International coal price registered a 7.1 percentage points decline on yearly basis, stepping down to $79 per tonne in the first half of FY14. The same however soared by 5.8 percent on a quarterly basis to $81.50 per tonne. 
During the first half of FY14, cement manufacturers increased sales prices by 3.0 percent on yearly basis (Rs 13 per 50kg bag) to Rs 462 per bag on average while on quarterly basis same increased by 1.7 percent to Rs 507 per bag, keeping the margins intact. The current rally in coal prices is expected to be nullified by higher sales prices during the second quarter of FY14, said the analyst.
The revival in dispatches during the second quarter of FY14 is expected to improve the profitability of the cement manufacturers. Although, the rising trend was seen in coal prices during the quarter, however cost pass-on phenomena will support the margins of the sector, he added.

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