Cement sector’s capacity may expand

Cement sector’s capacity may expand
Published: 05 December 2005

Pakistan: with all the expansions coming online left right and centre, investors are confused about how much total supply of cement will be there in the market. According to calculations of cement sector analysts total capacity of the industry at the end of fiscal year 2006 would be around 21.5Mt as compared to 17.9Mt at the end of fiscal year 2005.

Against this supply of 21.5Mt, it is expected that the local demand will reach 17Mt, whereas exports are likely to show a growth of eight per cent in the full year and total 1.7Mt taking the total demand to around 18.7Mt. This will mean a local capacity utilisation of 79 per cent and a total utilisation of 87 per cent. It seems that with the capacities coming online, the lowest capacity utilisation to hit the industry would be 61 per cent, for local sales in fiscal year 2009, when the total capacity utilisation is expected to amount to 69 per cent.

With the emerging higher demand and increased production scenario Lucky Cement is expected to be a key player of the industry. Lucky being the largest cement manufacturer now will benefit the most from this situation. It is expected that its second expansion in Karachi will come fully online in the second half of fiscal year 2007. The first has already come online. It is likely that Lucky’s capacity would total 2.7Mt at the end of fiscal year 2006.