Pakistan optimistic on 2011 prospects

Pakistan optimistic on 2011 prospects
26 January 2011

The Pakistan cement industry is quite optimistic that 2011 will be more prosperous for the industry as new export markets/orders are being explored in East Africa, Middle East, Asia and the Far East.

Local dispatches are expected to rise on post-flood reconstruction activity coupled with surging cement prices in the domestic market. In addition, total Pakistan capacity is set to increase from 42.4Mt of clinker and 44.68Mt of cement to 44.56Mt and 46.95Mt respectively due to the addition of Fauji Cement’s new line.

Lucky Cement, Pakistan’s largest cement exporter, told CemNet that its export performance will improve as it has explored new markets in Kenya and is strengthening orders to Sri Lanka.

However, Farhan Bashir Khan, senior research analyst at InvestCapital told CemNet that international coal prices are increasing and it may affect the profit margin of small cement players. Similarly, low prices in international markets and increases in regional capacity would also affect exports. Hence, new markets have to be explored to maintain profitability. One possible market is that of Qatar which is preparing for substantial construction work ahead of it hosting the 2022 FIFA World Cup.

Pakistan cement manufacturers and exporters produced 32.34Mt of cement in full calendar year 2010 (Jan-Dec) against 33.36Mt cement in 2009 – representing a YoY fall of 3.06 per cent.
The breakdown of data indicates that between Jan-Dec 2010 Pakistan’s producers dispatched 22.63Mt locally and export dispatches stood at 9.7Mt from 22.08Mt and 11.27Mt respectively between Jan -Dec 2009 – an increase of local sales of 2.49 per cent but a fall in exports of by 19.25 per cent. 

Data from the All Pakistan Cement Manufacturers Association (APCMA) shows that decline in cement exports was mainly due to reduced volumes to India and other countries. Exports of bulk cement also declined, Lucky Cement’s officials highlighted.
Afghanistan was the biggest importer of cement from Pakistan in last calendar year with total quantity stood at 4.43Mt.  India imported 599,257t of cement.

The State Bank of Pakistan has said that activity in local construction industry has strengthened further with stable building material prices and growing housing demand, as is evident from higher growth in cement dispatches during Q3-FY10 compared with Q3-FY09 as well as H1-FY10.
Pakistan cement industry sources said though a growth of five per cent was witnessed in first half of the calendar year 2010, floods in July/August resulted in demand contraction of 11 per cent on yearly basis in the second half of the year. During 2010, local consumption improved steadily. However, exports declined by a significant margin. 

Industry estimates that Pakistan would register cement sales of 32.8Mt in fiscal year 2011 (Jul 2010 to Jun 2011) and 33.6Mt in calendar year 2011 (January to December 2011). However, they believe local dispatches would be affected due to the Finance Minister Dr Abdul Hafeez Sheikh  statement which said that the expenditure on the Public Sector Development Programme (PSDP) had been cut to PKR180bn from PKR280bn for the FY11. To curtail the fiscal deficit, the PSDP could be further reduced to PKR140bn.
Published under Cement News