ISLAMABAD: Pakistan’s cement industry witnessed a complex performance in August 2024, with local cement dispatches projected to rise by 8% month-on-month (MoM) to 2.67 million tons. However, this increase is overshadowed by a significant 30% year-on-year (YoY) decline, reflecting ongoing challenges within the sector. The analysis, based on the actual numbers from the first 18 days of the month, indicates that local sales currently stand at 1.55 million tons.
According to Topline Pakistan Research, the MoM growth in dispatches is largely attributed to a low base in July 2024, which was marked by partial strikes by dealers and traders across the country. In July, sales totaled 2.46 million tons, well below the previous six-month average of 2.99 million tons. This August, the average daily domestic sales are expected to reach 86,000 tons per day, which is notably lower than the August 2023 average of 122,000 tons per day.
The YoY decline in local cement dispatches is driven by a slowdown in construction activities, mainly due to the higher cost of construction inputs and the rising prices of cement bags. Prices in the North and South regions have surged by 29% and 19% YoY, respectively, according to data from the Pakistan Bureau of Statistics (PBS). A significant development in August was the court-issued stay order obtained by Punjab-based players regarding increased royalty per bag, leading to a mid-month price hike of Rs65-75 per bag.
On the export front, August 2024 is expected to see an 8% MoM increase, though this still represents a 19% decline YoY. Notably, DG Khan Cement Company (DGKC) is likely to achieve a 19% MoM growth in exports, while Lucky Cement (LUCK) and Attock Cement Pakistan Limited (ACPL) are anticipated to see MoM declines of 3% and 48%, respectively.
This mixed performance brings Pakistan’s total cement sales for August 2024 to approximately 3.26 million tons, marking a 28% YoY decrease but an 8% MoM increase. The total cement capacity utilization for the month is estimated at 47%, up from 44% in July 2024 but down from 66% in August 2023.
Looking at the broader picture, the first two months of FY2025 (2MFY25) paint a challenging scenario for the industry, with total cement sales likely to drop by around 19% YoY. Local sales are expected to decline by 22% YoY, while exports are projected to decrease by 4% YoY.
In terms of pricing, the average retail price in August 2024 saw a 1% MoM increase in the North and remained largely unchanged in the South, as reported by PBS. The ongoing economic pressures and fluctuating market dynamics continue to shape the trajectory of Pakistan’s cement sector, leaving industry stakeholders cautiously navigating the months ahead.
