A big number of capacities will be added in Pakistan’s cement industry, later this month and in early next year, according to market analysts. Current capacity projects are forecast to add around 10Mta of extra capacity to the present 59.42Mta. This is expected to lead to higher levels of competition and price wars in the coming year.
According to IMS Research, from December 2019 onwards, the northern market will see multiple expansions with Lucky Cement (2.6Mta in December 2019), Kohat Cement (2.3Mta in December 2019) and Pioneer Cement Ltd (PIOC) (2.6Mta slated for 3QFY20). In the south PIOC is adding 2.5Mta in 3QFY20. The extra output is anticipated to test pricing power, particularly in the north due to limited export opportunities following the suspension of exports to India, although a sustainable growth trend may be able to hold prices at current levels.
Growth in November 2019
While reviewing the dispatch data for November 2019, experts attribute it to the second postponement of CNIC condition on sales (delayed until January 2020) and a pick-up in construction activity (especially on the private side). Disbursements under Public Sector Development Programme (PSDP) have also increased by 64 per cent YoY during FY20TD, to PKR297bn (US$1.79bn).