Cement dispatches exhibit mixed trend during January 2024

Cement dispatches exhibit mixed trend during January 2024
07 February 2024

Pakistan's total cement dispatches declined by 14.8 per cent in January 2024 to 3.414Mt against 4.006Mt in January 2023. Out of this total, local cement deliveries decreased by 17.3 per cent to 2.967Mt compared to 3.588Mt in January 2023. However, exports increased by 6.8 per cent as the volumes increased from 418,067t in January 2023 to 446,595t in January 2024.

A spokesman of the All Pakistan Cement Manufacturers Association (APCMA) informed the government about the serious implications of the new axle load regime, due to which the loading capacity of vehicles is significantly reduced, leading to operational inefficiencies and increased inland transportation costs as well as freight, handling and shipping costs for export consignments. All these factors are expected to pressure cement prices, likely resulting in high costs to domestic consumers and adverse effects in terms of exports. He added that the association has repeatedly requested concerned government quarters to review the new axle load regulations and address the related industry concerns on priority. 

On a different tone, Usama Rauf, the investment analyst at AKD Securities, said the decline in domestic dispatches can be attributed to a slowdown in private construction due to rising construction costs and a halt in public projects amidst elections. The annual decline is also attributed to the high base set in the previous year, marked by increased post-flood sales. Furthermore, local sales were affected by raised prices following axel load implementation. Meanwhile, exports encountered challenges with heightened freight premiums amid the Red Sea crisis. Furthermore, while markets expect total cement dispatches to increase by 2-3 per cent YoY in FY23-24 (driven by improvements in exports), the persistence of the Red Sea crisis and higher sea freight costs could potentially result in flat YoY dispatches for the current year.

Northern and southern dispatches
In January 2024 northern-based cement mills dispatched 2.434Mt of cement, showing a decline of 15.8 per cent against 2.892Mt of dispatches in January 2023. Southern-based mills delivered 979,970t  of cement during January 2024, 12.1 per cent less than the 1.115Mt during January 2023.

Northern cement mills supplied 2.385Mt of cement to domestic markets in January 2024, showing a decline of 16.5 per cent against 2.856Mt in January 2023. Southern mills dispatched 582,258t of cement in local markets during January 2024, which was 20.4 per cent less than the dispatches of 731,747t in January 2023.

Exports from northern mills increased by 38.8 per cent as volumes rose from 35,215t in January 2023 to 48,880t in January 2024. Exports from the south slightly increased by 3.9 per cent to 397,712t in January 2024 from 382,852t during the same month last year.

Total dispatches in 7MFY23-24
In the 7MFY23-24 total cement dispatches (domestic and exports) were 27.296Mt, 5.9 per cent higher than 25.77Mt last fiscal year. Domestic deliveries during this period were 23.196Mt against 23.618Mt during the same period the previous year (SPLY), showing a reduction of 1.8 per cent. 

Exports showed a healthy increase of 90.5 per cent as the volumes increased to 4.1Mt during the 7MFY23-24 compared to 2.152Mt of exports during the last fiscal year.

Northern mills dispatched 19.157Mt of cement domestically during the 7MFY23-24 of the current fiscal year, showing a reduction of 1.1 per cent from cement dispatches of 19.378Mt from July 2022 to January 2023. Exports from the north increased by 33.7 per cent to 820,056t from July 2023 to January 2024, compared with 613,289t exported during the same period last year. Total deliveries by northern mills remained almost flat at 19.977Mt during the 7MFY23-24, down from 19.991Mt the previous financial year.

Domestic dispatches by southern mills from July 2023 to January 2024 were 4.039Mt, showing a reduction of 4.7 per cent over 4.24Mt of cement dispatched during the last fiscal year. Exports from the south surged by 113.1 per cent to 3.279Mt from July 2023 to January 2024, compared with 1.539Mt exported during the same period last year. Total dispatches by southern mills increased by 26.7 per cent to 7.319Mt in the 7MFY24 from 5.779Mt in the previous financial year.

Published under Cement News