Pakistan: CPEC to generate 3Mta demand

Pakistan’s cement industry will experience growth thanks to the commencement of construction projects under the China-Pakistan Economic Corridor (CPEC). 

Experts have suggested that the projects will generate an additional cement demand of between 1.5-3Mta for Pakistan.

In the first half of this financial year, local dispatches showed a growth of 16 per cent YoY to 15.2Mt. Local dispatches are expected to grow a further 15 per cent YoY in the second half of the financial year, reaching 17.4Mt. This growth assumption is based on an eight-year (FY08-15) historical average growth rate of 15 per cent in the second half of the fiscal year compared to the first half.

In addition, cement producers' profit margins will be supported by the near 11-year low of international coal prices, which have reached US$50/t as well as lower electricity charges. It is predicted that profitability of major cement companies could grow 17 per cent YoY to PKR6.5bn (US$62.1m) in 2QFY16. Total cement sales from major companies are expected to grow seven per cent YoY to PKR33bn (US$315.4m) in 2QFY16.