Pakistan’s DG Khan Cement and Maple Leaf Cement export sales registered solid growth of 113 per cent and 114 per cent, besides increasing their market shares in export sales to 14 per cent and 12 per cent respectively.
According to the latest data, Lucky Cement, the largest cement exporter in Pakistan, strengthened its position in the export market with growth of 29 per cent, however market share trimmed down to 30 per cent from 35 per cent last year, however, Pioneer and LafargeCement depicted negative growth of 70 per cent and 15 per cent.
Cement exports in the outgoing year FY09 grew by 47 per cent compared to total dispatches growth of 2 per cent. Regional capacity constraints drove exports upwards. Though regional capacity expansions by FY10 are likely to hurt exports, experts believe tapping new markets will help mitigate the damage. A decline in export retention prices remain a downside risk to our valuation. JS Capital Market experts maintain their Market-Weight stance on the sector with Lucky and DG Khan Cement amongst their preferred plays.
Cement exports in FY09 depicted an astounding growth of 47 per cent to 11.4Mt compared to 7.7Mt last year. Despite global recessionary woes, regional cement demand remained afloat largely driven by previously initiated projects in the Middle East and reconstruction activities in worn torn Iraq and Afghanistan.
Local cement manufacturers capitalised on the regional cement shortfall as they looked to increase their export to local sales ratio with local sales (down 14 per cent) dwindling last year. Moreover, rupee devaluation against US dollar and higher retention for export sales proved further incentives to expand export horizons for manufacturers.
The GCC region is set to increase its capacity by 119 per cent by the end of FY10 which will hurt Pakistan’s cement exports to the region.
The GCC constitutes 39 per cent of the total cement exports with Qatar, Oman and UAE leading the pack with 12 per cent, 10 per cent and 10 per cent share. However, new markets are being explored with some success already achieved. This is evident from details made available by TDAP, which shows exports sales have increased to countries like Sri Lanka, Lebanon, Sudan & Mozambique since last year.
Political tensions with India and law & order situation in Afghanistan borders adjoining areas remain key concerns as well. Last year cement exports to India fell by 24 per cent with 15 per cent rise in exports to Afghanistan amid rehabilitation post war.