Good start to financial year for Pakistani producers

Good start to financial year for Pakistani producers
03 August 2020

Pakistan's cement industry displayed a robust jump in sales during the first month of the current fiscal year (FY20-21). The significant increase in dispatches also reflected in the performance of scripts on Pakistan's Stock Exchange (PSX) for the last few days.
According to provisional cement data compiled by AHL Research, July 2020 displays an uptick of seven per cent MoM to 4.97Mt (June 2020: 4.62Mt) led by growth in south. Total dispatches show a considerable increase of 41 per cent YoY, with the domestic market expanding 36 per cent and export shipments seeing a 71 per cent surge to 0.91Mt.

In particular, sales from the south touched an all-time high with total dispatches up by 63 and 10 per cent YoY and MoM, respectively. Following the reopening of the economy post lockdown, local dispatches advanced six per cent YoY and 19 per cent MoM.
Meanwhile, exports from the south arrived at a record 0.78Mt (all-time high), depicting a gradual resumption of global trade aided sales to Bangladesh and Sri Lanka. Similarly, dispatches in the north also witnessed a remarkable growth of 35 per cent YoY/seven per cent, MoM, to 3.66Mt. Further analysis of data for the north revealed that local sales saw a 43 per cent hike YoY/four per cent MoM attributable to the construction of housing colonies at Diamir-Bhasha and Mohmand dam sites, as well as other private sector demand. In comparison, exports from the north arrived at 0.13Mt, down by 44 per cent YoY/up by 182 per cent MoM.
Recovery set in motion
Earnings are expected to rebound in FY20-21 due to several factors. Coal prices have been coming down close to the levels seen in FY15-16, when the sector's margins peaked while the forecast stability in the rupee-us dollar parity and the cut in FED to PRK1500/t (US$8.98/t) from PKR2000/t following the country's budget are also predicted to contribute. A hike in cement prices alongside predicted robust sales growth due to the construction package announced by the government as well as a focus on the construction of dams and highways are also expected to contribute to the sector's recovery.

Published under Cement News