Skip to content

Cement dispatches to fall by 9pc

LAHORE  –   Pakistan cement dispatches are likely to register 9 percent decline in January 2019 annually. On monthly basis, it is expected that volumes will fall by around 4 percent.

According to industry experts, the volumes will be lower mainly on the back of weak local dispatches as cold weather and slowdown in economy continue to post challenge to the local industry. Taking cue from discussion with the industry, the decline in local sales can be as much as 15-20 percent YoY in Jan 2019. To note, Large Scale Manufacturing (LSM) numbers remained disappointing in 5MFY19 as the index was down 0.9 percent YoY.

Continuing with its past trend, exports will remain encouraging during Jan 2019 at over 60 percent annually on the back of higher clinker sales to regional countries. Due to lower local demand, South players are striving to export surplus inventory to avoid pricing pressure on domestic cement prices

Experts said that due to weak macros and tightening monetary policy, local cement demand is likely to fall by up to 3 percent annually in FY19 while higher input costs will likely keep pressure on profit of the cement industry. To note, Dec 2018 quarterly results of cement producers have started coming in and as per initial impression, it is expected further contraction in gross margins (1QFY19 margins were at 24 percent).

Despite sluggish local demand, total dispatches are likely to post 3 percent YoY growth in 7MFY19, mainly on the back of stellar growth in exports. Experts believe that slowdown in economy (where it is expected FY19 GDP growth at 3-4 percent versus 5.8 percent in FY18) is likely to keep pressure on domestic side.

Published by

Leave a Reply