Cement industry to remain buoyant on housing demand

April 5, 2021 (MLN): Driven by strong domestic demand from housing projects and a rebound in exports, the Cement industry has posted the highest-ever monthly growth of 44.4% YoY in March’21.

On a sequential basis, dispatches increased by 17.3% MoM, taking 9MFY21 local dispatches growth to 16.9% YoY or 43.3 MTs.

This significant jump in cement sales during the month is mainly attributable to a low base effect due to covid-19 related lockdowns back in March’20, extension in construction package, and disbursement of subsidy under NPHP amid relaxed requirement and monetary relief by SBP which kept the cement demand growing.

On the domestic front, overall dispatches increased by 42% YoY and 15.1% MoM in Mar’21. While exports increased by 59.8% YoY and 31.6% MoM.

The region-wise comparison shows that south-based players outperformed the industry with 48.5% YoY growth due to strong domestic demand from the private sector amid extension in construction package. while North region dispatches increased by 43.2% YoY.

On monthly basis, sales in both north and south regions grew by 18% and 15.4% respectively. Local sales in both the North and South region surged by 38.5% YoY and 62.3% YoY respectively. While on a month-on-month basis, sales jumped by 16.1% and 10.3% to 3.8 MTs and 0.8MTs respectively. Whereas exports numbers of north and south regions also posted an increment of 50.2% and 23.6% MoM.

Subsequently, the utilization level of the industry stood inclined by 26.1% YoY and 13.7% MoM to 92.9% in Mar’21. Further bifurcation reveals that north utilization remained at 92.0%, while south region utilization amplified to 95.8%.

On the pricing front, retail prices in the northern region increased to Rs.604/bag in Mar’21 compared to Rs.601/bag in Feb’21. Furthermore, region exports increased by 162.6 YoY and 50.2% MoM in Mar’21 due to low base effect given COVID induced lockdown in Mar’20 and increased trade with Afghanistan, a report by Foundation Securities cited.

In the South region, after a continuous decline, prices are started to recover and have surged by 1.1% MoM in March’21 to Rs.620/bag from Rs.615/bag in the previous month. According to the report, higher exports and record domestic sales allowed south based players to increase prices.


Considering the major housing schemes, dams’ construction, construction package, low urbanization, lower interest rates, soft home loans, and better cement prices, the cement industry is expected to remain upbeat in the medium term. Furthermore, with a revised loan under the housing scheme, the construction activity is likely to progress further. As previously, the loan size was Rs.5 million that has now been revised to Rs.10 million, along with lower financing costs for borrowers.

Moreover, a better utilization level given higher cement demand would allow a gradual increase in cement prices in FY22/23, In addition, lower finance costs due to reduced interest rates would also support the sector’s profitability.

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Posted on: 2021-04-05T16:07:00+05:00