Home South Asia Pakistan Amid an economic slowdown, Pakistani cement exports are looking up

Amid an economic slowdown, Pakistani cement exports are looking up

In a report published by Topline securities, the cement industry in Pakistan looks to be a mixed bag in 2019: While the domestic demand for cement in Pakistan is on a downward trend this year, exports are looking at exponential increases which key players and the national economy are set to benefit from.

Cement

News Desk |

The promise of good times ahead by the new government and the announcement of massive infrastructure projects like the Naya Pakistan Housing Society or more metro lines in Karachi, foretold prosperous times for a cement industry that was experiencing a boom in the past few years.

In February 2019 Fitch Solutions, a company focusing on credit, economic and political research, published a report in which it claimed that the Pakistani economy would be primarily driven by CPEC-led growth during the next five to ten years. They also predicted that the construction industry would have an annual growth rate of 8.9% over the next five years largely due to CPEC projects, which would then complement the cement industry.

Askari Cement export cement all the way to Sudan, Dubai and even South Africa, are uniquely positioned to take advantage of the coming scenario.

However, recent developments have dashed the hopes of many in the industry: the CPEC projects are not yielding the volume of direct demand that was expected, and incessant and repeated delays in the new government’s housing projects are contributing to this slowdown.

Read more: Pakistani cement exports grow despite challenges in India, Afghanistan

As the economic woes of the country have increased in preceding months, even the regular domestic demand has stalled: 10% inflation, an interest rate at 13.25% and a steep drop in the value of the rupee against the dollar have all shrunk the ability of Pakistanis to build homes, buildings and other ventures requiring cement.

Overall, this could mean a 3% decline in domestic demand in 2019 according to a report published by Topline securities. However, not all the news in the cement sector is negative. The cement industry is still expected to experience an overall growth of 1% primarily owed to an expected 37% increase in exports.

A company focusing on credit, economic and political research, published a report in which it claimed that the Pakistani economy would be primarily driven by CPEC-led growth during the next five to ten years.

Overseas exports, particularly, are expected to increase by an astonishing 141%, effectively more than doubling this part of the industry compared to last year. This means that companies like Askari Cement in particular, who export cement all the way to Sudan, Dubai and even South Africa, are uniquely positioned to take advantage of the coming scenario.

Read more: Pakistan cement exports to grow despite Indian ban

Being one of the largest and oldest producers of cement in Pakistan, Askari Cement has both the resources and experience to make the most of what is a pressing time for Pakistan’s economy. Having already tapped these diverse overseas markets to a great extent, expanding focus on them could help compensate for slowing demand and utilize more of their capacity.

Askari cement and other companies can be key players in benefitting the national economy at this stage, being one of the few sectors that can correct the country’s balance of payments through a rapid rise in exports.

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