ISLAMABAD: Pakistan’s cement industry faced a significant decline in August 2024, with cement dispatches plummeting by 26% year-on-year to 3.37 million tons. This downturn has been largely attributed to a marked slowdown in construction activity, exacerbated by the heavy monsoon rains that swept across the country, disrupting projects and dampening demand.
As per AKD Research, the average cement prices in the northern region saw a sharp increase, rising by PKR 43 per bag over the past month. This surge in prices is a direct result of the Punjab government’s decision to hike royalty rates, pushing the average cost to approximately PKR 1,530 per bag. The price increase is adding further strain on the already beleaguered construction sector.
Analysts remain cautious about the outlook for the cement industry, maintaining their forecast of a 2-2.5% year-on-year decline in local cement demand for FY25. However, there is a silver lining: cement exports are expected to outperform last year’s figures, which could help offset the downturn in domestic demand. As a result, total cement offtakes are anticipated to remain flat on an annual basis.
In this challenging environment, certain companies are expected to fare better than others. LUCK, FCCL, and MLCF continue to be the top picks in the sector, with their strong market positions and resilience in the face of adversity. Additionally, highly leveraged players such as DGKC and POWER could attract attention as the ongoing monetary easing offers some relief.
The industry faces a tough road ahead, but with strategic positioning and a focus on exports, there is potential for stabilization in the months to come.
