ISLAMABAD: Pakistan’s cement industry is grappling with a challenging landscape as local dispatches for September 2024 are projected to fall by 22% year-on-year, despite a modest month-on-month increase of 1%, bringing total local sales to approximately 2.79 million tons. This decline is largely attributed to a slowdown in construction activities, driven by the soaring costs of construction inputs.
According to Topline Pakistan Research, preliminary figures reveal that local cement sales for the first quarter of FY25 are anticipated to decrease by 21% compared to the same period last year. Analysts noted that average daily domestic sales in September are expected to hit 93,000 tons, significantly lower than the 118,000 tons per day recorded in September 2023.
The slight month-on-month increase in dispatches, up from 2.75 million tons in August, is primarily linked to a low comparative base from the previous month. However, year-on-year comparisons paint a stark picture, with the ongoing construction slump and escalating cement prices—up by 25% in the North and 19% in the South—contributing to the downturn.
Further complicating the situation are the recent increases in cement bag prices, which rose by Rs65-75 due to heightened royalties in Punjab. While no instances of intra-provincial dumping have been reported, discussions among stakeholders have commenced regarding the discrepancies in royalties affecting the market dynamics.
On a more positive note, cement exports are projected to rise by 27% month-on-month and 36% year-on-year, with companies like DGKC and ACPL leading the charge. This brings total cement sales for the month to an estimated 3.56 million tons, reflecting a 14% decline year-on-year, but a 6% increase from August.
Capacity utilization within the cement sector is also showing signs of strain, estimated at 52% in September, an improvement from 47% in August, yet still lower than the 60% recorded in September 2023. As the industry braces for potential continued challenges, the outlook remains uncertain, particularly for local sales.
As stakeholders navigate these turbulent waters, the focus shifts to sustainable solutions that could reinvigorate the construction sector and stabilize cement prices, ensuring the industry’s resilience in the face of economic headwinds.
