Cement demand increases during Jan-March

Pakistani cement demand increased by 12 per cent in the country during third quarter of the current financial year as it stood at 3.9Mt compared to 3.5Mt in the same period last fiscal. The data released by All Pakistan Cement Manufacturers Association (APCMA) said the cement exports rose nine per cent during January-March quarter on year on year basis but the growth shrank to six percent in during the third quarter at 308,269t compared to the same period of 2003-04.

The demand from the local consumers increased by 17 per cent in March 2005 to 1.44Mt compared to 1.23Mt in the same month last year, the APCMA data said. The foreign demand of the cement also rose by nine per cent in March 2005 to 1.78Mt. Overall, the APCMA figures said, capacity utilisation was recorded at 87 per cent during the quarter compared to 77 per cent it was registered during January-March 2004.

“Growth of demand was strongly motivated by wide spread unprecedented rains acrtoss the country, severe winter snowfall in the Northern areas and slowing of development activities in Afghanistan due to the winter season,” said Tariq Saigol, chairman APCMA. “In the first half of the current financial year the cement demand showed buoyant growth at 24 per cent over the previous year.” He said the rainy weather and snowfall in the country slowed down the cement demand at 12 per cent over the previous quarter, otherwise it could further increases.

He said from July 2004 to March 2005, total dispatches of cement amounted to 10.64Mt for the domestic market and 10.85Mt for export, which showed a healthy growth of 20 per cent over the corresponding period last year. “Growth of almost 20 percent despite difficult conditions in the third quarter demonstrates a healthy trend in both the private and public sectors,” said the APCMA chairman.

Analysts believe that the next quarter would be most exciting for the cement manufacturers as the construction period normally starts in March and remains continue by July. “The growth expected to be a high during this period as the rainy weather is almost over and construction activities are in full swing,” said Abdul Rasheed, an analyst at Jahangir Siddiqui and Company. He said during the next quarter the cement industry was expected to touch record production level with record capacity utilisation levels. The APCMA also said the severe inflationary pressures, in shape of price hike of coal, natural gas, furnace oil, transportation charges and sharp upward movement in interest rates, has meant that although capacity utilisation had been good, profitability of the various cement units had been somewhat adversely affected.