July 15, 2022 (MLN): Cement dispatches witnessed a marginal growth of 1% to 5.26mn tons in June 2022 compared to the same month last year, while it increased by 58.6% MoM from 3.3mn tons in May'22, data released by All Pakistan Cement Manufacturers Association (APCMA) showed today.
This took the total cement dispatches during FY22 to clock in at 52.92 million tons as against 57.3mn tons in FY21, posting a decline of 7.7% due to uncertain business and economic conditions prevailing in the country.
Moreover, slow disbursement of PSDP coupled with massive PKR depreciation and rising prices of petroleum products, electricity and coal, kept the cement demand under pressure.
Going by the data, the local cement dispatches by the industry during the month of June 2022 were 4.97mn tons compared to 4.66mn tons in June 2021, showing a jump of 6.6%. However, on monthly basis, local cement dispatches improved significantly by 58% from 3.14mn tons in May’22.
Export dispatches continued to suffer a massive decline of 47.6% on yearly basis as the volumes reduced from 0.54mn tons in June 2021 to 0.28mn tons in June’22. On a monthly basis, export dispatches went up by 65.5%.
During FY22, local dispatches reached 47.65mn tons compared to 48mn tons in FY21, depicting a decline of 1% YoY. While exports dispatches during the period clocked in at 5.25mn tons, down by 43.6% YoY from 9.3mn tons in FY21.
Region-wise, during June 2022, North-based cement mills dispatched 4.12mn tons of cement in domestic markets showing an increase of 6.8% against 3.85mn tons dispatched in June 2021.
On the other hand, South-based mills dispatched 0.86mn tons of cement in local markets during June 2022 which was 6% higher compared to the dispatches of 0.8mn tons during June 2021.
Exports from North-based mills massively declined by 52% YoY as the quantities reduced from 0.2mn tons in June 2021 to 0.09mn tons in June 2022. Similarly, exports from the South reduced by 45% to 0.2mn tons in June 2022 from 0.34mn tons during the same month last year.
Data further revealed that North-based Mills dispatched 39.4mn tons of cement domestically during FY22, showing a reduction of 2.6% than the cement dispatches of 40.5mn tons during FY21. Exports from the North declined by 64.5% to 0.9mn tons during July-June 2022 compared with 2.56mn tons exported during the previous fiscal year.
Meanwhile, domestic dispatches by South-based Mills during FY22 were 8.2mn tons showing an increase of 9.3% over 7.5mn tons of cement dispatched during last fiscal year. However, there was a substantial decline of around 35.6% witnessed in exports from the south zone as the volumes reduced to 4.3mn tons in FY22 from 6.7mn tons during the last fiscal year.
The fall in exports is primarily attributable to the slowdown in demand in the global markets amid inflationary pressure along with higher interest rates. Similarly, freight rates have soared by around 4-5x amid supply chain disruptions due to the Russia-Ukraine war that created volatility in international markets, thus leading to a massive decline in exports.
On the local front, the industry is facing difficult times amid record-high coal, electricity, and fuel prices.
Due to this, the price of cement bags in the local market is likely to increase further in the coming months owing to the inflated cost of production, which can further plunge the local demand for the cement, analyst at Abbasi & Co. said.
However, the National Economic Council (NEC) had approved a federal PSDP of Rs. 800 billion which can help boost the demand for cement, he added.
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