Pakistan cement sector posts growth of 1.98 percent in February 2021 year-on-year basis. Total cement dispatches during February 2021 were 4.577 million tons against 4.489 million tons of last year.
However, “with winter in the rearview, construction activity is expected to pick up while medium term outlook remains bright on the back of various incentives being provided to the construction industry,” says AKD Securities.
According to AKD daily, dispatches have increased 6% in February compared to the same month last year. According to the report, the South of the country fared better among the two regions, witnessing a 22% increase while the North saw a 3% increase.
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“Moving forward, post conclusion of the winter season, local demand is expected to remain strong as the private sector continues to support while an additional stimulus is expected to arrive from projects being initiated by government under Naya Pakistan Housing Scheme”, it said in its report.
Discussing the ongoing pandemic, the report said,” local dispatches in Mar’20-May’20 remained under pressure due to COVID-19 related restrictions hence from Mar’21, the low base is expected to amplify the growth for next three months.”
The report mentions that even though the political sector has impacted the economy, the fundamentals of the cement sector remain strong and once the political uncertainty ends, the industry looks up to be the frontrunners of the economy. The report hopes that players can easily pass on the cost and demand for the cement that remains high in the market.
Talking about the expansion announcements, the AKD daily for 5th March said that the increase in coal prices in October 2020 has led to increasing in the price of cement to Rs. 35 per bag, but state that the “we believe the pass-on of increase in cost is almost complete”, and in future demand will determine the price of cement in the market.
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Companies such as Kohat Cement Company, Maple Leaf Cement Factory, and DG Khan Cement announcing expansions of 2.3-3mn tons, 2.4mn tons, and 2.7-3.6mn tons, respectively. This according to the report means that the companies are ready for strong demand in cement, which would take the utilization of factories’ capacity to 97% by the Fiscal year 2023 if expansion is not done.