Cement News

Cement sales plunge 47.7pc on construction slowdown – Newspaper

KARACHI: The country’s overall cement despatches – local sales and exports – declined by 47.7 per cent in July to 2.009 million tonnes, down from 3.899m tonnes a year ago.

According to the data shared by the All Pakistan Cement Manufacturers Association (APCMA), local cement despatch fell 45.28pc to 1.88m tonnes in July 2021 from 3.44m tonnes in July 2021 due to monsoon rains and longer Eidul Azha holidays. Exports fell by 66pc to 153,517 tonnes in July from 452,777 tonnes a year ago.

Cement mills in the North shipped 1.68m tonnes in July, a 44.3pc decrease from 3.02m tonnes in July 2021. South-based mills shipped 352,747 tonnes in July, a 59.53pc decrease from 871,601 tonnes a year ago.

According to the APCMA data, North-based cement mills sold 1.61m tonnes in domestic markets, a 44.11pc decrease from 2.89m tonnes in July 2021. South-based mills shipped 269,477 tonnes to local markets in July 2022, a 51.4pc decrease from the previous year’s total of 554,442 tonnes.

Exports from North-based mills fell by 48.2pc, falling from 135,618 tonnes in July 2021 to 70,247 tonnes in July 2022. Exports from the South also plunged by 74pc to 83,270 tonnes in July 2022 from 317,159 tonnes during the same month last year.

Mehroz Khan of Top Line Securities attributed July’s sales fall to a slowdown in construction activities owing to rain and higher construction costs.

He said exports suffered owing to the global economic slowdown, disruption in the global supply chain and higher sea freight.

Industry utilisation during July was estimated at 34-36pc versus 67pc in the same period last year.

The start of FY23 looks bleak despite the summer season, where usually the cement dispatches are higher as compared to the winter season. This shows a clear reflection of the economic downturn where the cost of all the construction materials is on the higher side, thus eroding demand, Mr Khan said.

According to him, cement prices are hovering around Rs1,050 per 50 kg bag, up 20pc from Rs875 per bag in May due to higher coal prices (including Afghan coal), rupee depreciation against the US dollar and rising fuel prices.

The Afghan coal prices (factory cost) increased by 33pc to Rs66,000 per tonne as the Afghan government raised ex-mine prices and export taxes which were procured by the north’s cement industry players, he said.

With rising interest rates, an expected slowdown in economic growth and a contained Public Sector Development Programme (PSDP), he expected cement dispatches to remain under pressure in FY23.

A spokesman of APCMA emphasised that massive currency devaluation, political uncertainty and a deteriorating economy need to be addressed by the government to provide a stable environment for industries. “The situation is very alarming and government must come up with a solution to bring the country out of this crisis,” he added.

Published in Dawn, August 3rd, 2022

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