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Cement sales post 34% rise in Q1

* Expanding local demand, higher exports responsible

Staff Report

KARACHI: Cement sales rose by 34 percent during to the first quarter (July-September) of current financial year over the corresponding period of last year on the back of expanding local demand as well as higher exports.

According to sales figures released by the industry, cement dispatches totalled around 7.3 million tonnes in the period under review as compared to 5.4 million tonnes in the same period of previous year.

Of the total dispatches, local cement sales depicted 21 percent growth at 5.7 million tonnes as against 4.8 million tonnes previously. Export performance of the industry also continued to shine with total cement exports of 1.5 million tonnes during the first three months of current fiscal year, a phenomenal upsurge of 133 percent over the same period last year.

Local dispatches during this month stood at 1.8 million tonnes while exports were at 523,000 tonnes, representing eight and 120 percent growth respectively on a year-on-year (YoY) basis.

However, on a month-on-month (MoM) basis, total cement sales declined by 6.7 percent in month of September 2007 against the preceding month of August due to the month of Ramazan falling in the said month, which generally witnesses a slight slowdown in economic activity.

Analysts attributed the surge in cement sales to lower cement prices coupled with improved housing and construction activities during this period.

“Substantial export growth was the consequence of increasing construction activities in Afghanistan, Iraq, Middle East and African countries, said Muhammad Rehan Khan, analyst at First Capital Equities Limited (FCEL), adding that this upward trend is likely to continue in future with likely penetration in the Indian market as well.

The future outlook, he added on cement demand growth is also positive on the back of higher PSDP allocations and new avenues for exports.

Bilal Hameed, analyst at Jahangir Siddiqui Global Markets also forecasted pick up in cement sales particularly after Ramazan, when the sales slow down during the holy month due to sluggish construction activities.

On the export front, analysts see bright prospects for the cement sector as Russia is reportedly eyeing to import cement from Pakistan as well as the government is in final stages to allow cement export through the land route to India, whose appetite for cement could well be grabbed by Pakistani cement industry due to its close vicinity.

During the first quarther of current fiscal year, capacity utilisation of the industry improved slightly, despite the increase in industry’s installed capacity, as it improved to 81 percent as against 80 percent in last financial year.

Company-wise breakup shows that Pioneer Cement posted the highest growth of 85.7 pecent as its sales stood at 425,000 tonnes during the said period versus 229,000 tonnes last year.

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