June 08, 2022 (MLN): Cement despatches declined by 16 percent YoY and 6 percent MoM to 3.3mn tons in May 2022, data released by All Pakistan Cement Manufacturers Association (APCMA) showed today.
This took the total cement despatches during 11MFY22 to clock in at 47.62 million tons as against 52.2mn tons in the corresponding period last year, posting a decline of 8.8 percent.
Slow disbursement of PSDP coupled with massive PKR depreciation and rising prices of petroleum products, electricity and coal, kept the cement demand under pressure, analyst at Pearl Securities said.
Going by the data, the local cement despatches by the industry during the month of May 2022 were 3.15mn tons compared to 3.2mn tons in May 2021, showing a decrease of 1.6 percent. Export despatches continued to suffer a massive decline of 77 percent as the volumes reduced from 0.75mn tons in May 2021 to 0.17mn tons in May 2022.
Cumulatively, 11MFY22 local dispatches reached 43.44mn tons compared to 42.64mn tons in SPLY depicting a decline of 1.84% YoY. While exports despatches during the period clocked in at 4.97mn tons, down by 8.8 percent YoY.
Region-wise, during May 2022, North-based cement mills despatched 2.75mn tons of cement in domestic markets showing a decline of 5.2 percent against 2.7mn tons despatches in May 2021.
On the other hand, South-based mills despatched 0.58mn tons of cement in local markets during May 2022 which was 18.28 percent higher compared to the despatches of 0.5mn tons during May 2021.
Exports from North-based mills massively declined by 64 percent as the quantities reduced from 0.2mn tons in May 2021 to 0.07mn tons in May 2022. Exports from the South also reduced by 82 percent to 0.1mn tons in May 2022 from 0.54mn tons during the same month last year.
North-based Mills despatched 35.3mn tons of cement domestically during the Jul-May of the current fiscal year showing a reduction of 3.8 percent than cement despatches of 36.7mn tons during July-May 2021. Exports from the North declined by 65.6 percent to 0.8mn tons during July-May 2022 compared with 2.36mn tons exported during the same period last year.
Domestic despatches by South-based Mills during July-May 2022 were 7.33mn tons showing an increase of 9 percent over 6.7mn tons of cement despatched during the same period of last fiscal year. There was a substantial decline of around 35 percent in exports from the south zone as the volumes reduced to 4.16mn tons in eleven months of current fiscal year from 6.4mn tons during the corresponding period of 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 over the past years amid supply chain disruptions due to the Russia-Ukraine war that created volatility into international markets, thus led to a massive decline in exports.
In the coming months, Cement demand will remain under pressure due to the continuous pressure on rupee along with upward momentum in the prices of coal, electricity and petroleum products.
Similarly, the PSDP allocation in the upcoming federal budget for FY23 is expected to hold lower figures at Rs800bn against the allocated budget of Rs900bn last year due to which local cement demand likely to remain subdued.
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