Cement sector dispatches down 25% in Apr’24

Overview

In April 2024, cement dispatches in Pakistan totaled 2.94 million tons, marking a significant 25% decrease compared to March 2024. However, on a yearly basis, dispatches remained consistent. The decline in local dispatches to 2.33 million tons, down 30% MoM and 8% YoY, was largely influenced by reduced construction activity during Eid holidays and a high base effect from the previous month. On the other hand, exports in April 2024 increased by approximately 46% YoY, reaching 0.61 million tons. Sequentially, exports rose by around 2% MoM due to heightened demand and improved retention prices.

Regional Analysis

North Region: Dispatches in the North saw a 5% YoY decrease and a substantial 27% MoM decline. Local dispatches plummeted by about 29% MoM. Export dispatches, however, experienced noteworthy growth of approximately 73% YoY and 17% MoM, reaching 0.15 million tons.

South Region: Total dispatches in the South region showed a notable 13% YoY increase but witnessed a 20% MoM decline. Exports recorded a robust 39% YoY growth but dipped slightly by 3% MoM.

Year-to-Date Performance

In the first ten months of FY24, total cement industry dispatches reached 37.45 million tons, up 2% YoY from the same period last fiscal year (SPLY). Local dispatches stood at 31.73 million tons, down 4% YoY, while exports surged significantly by approximately 65% YoY, totaling 5.72 million tons.

Price Trends

Average retail cement prices in the North were around PKR 1,225 per bag as of May 2, 2024, up by 12% compared to the same period last year. In the South, average cement prices stood at PKR 1,200 per bag, reflecting a modest 3% YoY increase.

Coal Prices

International coal prices (Richard Bay) were approximately PKR 32.6K per ton, while local coal traded at PKR 29K per ton. With rising Afghan coal prices (PKR 38K per ton), the shift towards more affordable imported coal could support stronger margins for cement companies.

Outlook

Looking ahead, there are expectations for the Government to introduce industry-friendly measures in the upcoming budget to boost construction activities nationwide, potentially through higher Public Sector Development Program (PSDP) allocations, which could positively impact overall cement demand.

Additionally, despite a sequential dip in earnings by 15%, TSL Cement Universe earnings grew by 39% YoY during the first nine months of FY24, with improved gross margins. This trend is expected to continue in the next quarter, supported by increased dispatches and favorable coal prices.

Disclaimer:

The information in this article is based on research by Taurus Research. All efforts have been made to ensure the data represented in this article is as per the research report. This report should not be considered investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.