Cement industry rely on domestic sales over last few months
Cement manufacturers in the country were once viewed in terms of their abilities to succeed in international markets. But the past 12 months in the cement industry
have been all about domestic dispatches.
According to the All Pakistan Cement Manufacturers Association, total cement dispatches in the country have climbed by 3.47% in 11MFY15, compared with the previous year. The data show that cumulative exports have dropped by almost 11% during this period, while local dispatches have grown 8%.
Export tallies have been shriveling since the Afghan economy and North African markets began slowing. Restrictions on Pakistani cement by South Africa are the most recent in a series of blows to the country’s cement exports.
For investors, weak exports are not a red flag as long as the domestic demand continues to grow.
Sajjad Hussain, cement analyst at BMA Capital highlighted that “the property price boom in the South (especially Karachi) and execution of mega private projects such as Bahria Town and DHA Phase-9 are expected to continue to upward momentum” of the sector.
Cement makers in the North region, on the other hand, stand to be the biggest beneficiaries of big government-funded projects including Dasu and Diamer Bhasha dams as well as a number of infrastructure projects.
In fact, with major capacity upgrades and captive power installations across the cement sector, it seems that most domestic manufacturers are priming for a sustained run of ample domestic demand, firm prices and profits galore. Export constraints have not spoilt the party for the cement sector.