Based on cement dispatches over the first 11 months, Pakistan’s cement market is expected to contract by 10 per cent in FY22 (ending 30 June), compared to FY21, according to a report in the Business Recorder. This is in stark contrast to the 10-15 per cent growth forecast by the industry. Much of that predicted growth was dependent on the country’s massive infrastructure and power projects, along with the government’s Pakistan Housing Plan. But in reality domestic demand has remained low with rising construction costs stalling major projects across the country.
According to the Pakistan Bureau of Statistics (PBS), the cement price index grew by 51 per cent between May 2020 and May 2022. This, coupled with soaring coal and steel prices, has made construction very costly for builders and homebuyers, pushing the government housing plan onto the backburner. Economic challenges have also forced the government to make cuts in its Public Sector Development Programme (PSDP).
Although DG Khan Cement Co’s announcement regarding exports is good news, Pakistan’s overseas and cross-border cement sales currently stand at 11 per cent of all sales, compared to 17 per cent this time last year, with most shipments being affected by economic and political upheavals in local markets. Sri Lanka, for example, is defaulting on its external loans so it is sometime before its infrastructure market is expected to pick up, while Afghanistan is undergoing its own turmoil since the US exited the country.