Pakistan’s Cement Dispatches May Drop 18% in June 2024
Staff Report
Pakistan local cement dispatches are likely to be down by 18% MoM to 2.76 million tons in June 2024. Dispatches are also anticipated to decline by 21% YoY. Our analysis is based on the actual numbers of 23 days, with local sales standing at 2.05 million tons.
The MoM decrease in local cement dispatches is primarily due to fewer working days in June 2024 due to Eid holidays. Sales in May 2024 were higher due to post-Ramadan seasonal demand. Sales in May 2024 stood at 3.36 million tons compared to the 11MFY24 monthly average of 3.19 million tons.
Considering the above sales figures, the average daily domestic sales for the sector are expected to be 92,000 tons/day in June 2024, lower than the June 2023 average of 116,300 tons/day.
The YoY decline in local cement dispatches is attributed to (i) a slowdown in construction activities due to higher construction input costs, and (ii) 13% and 7% higher YoY cement bag prices in the North and South, respectively.
Exports during June 2024 are anticipated to decrease by 45% MoM and by 11% YoY. The MoM decrease is due to the impact of Eid holidays, and the YoY decline is due to lower demand from international markets and lower clinker sales during June 2024.PM Reviews Security and Law Enforcement Projects
This brings Pakistan’s total cement sales to around 3.28 million tons in June 2024, down by 19% YoY and 24% MoM. Total cement capacity utilization in June 2024 is estimated to be 48%, compared to 62% in May 2024 and 66% in June 2023.
In FY24, total cement sales are likely to increase by around 1% YoY, with local sales expected to decline by 5% YoY and exports to increase by 57% YoY. This would be the first time in the last 30+ years that local cement sales have declined for three consecutive years.
The average retail price in June 2024 increased by 4% MoM in the North and remained almost unchanged in the South, according to the Pakistan Bureau of Statistics (PBS).
Local cement sales are expected to decline by 5% in FY24 to 37.9 million tons. The decline is due to higher construction costs and higher bag prices. Lower government spending from the PSDP has also contributed to the decline.
Export sales are expected to increase by 57% YoY in FY24 to 7.15 million tons due to lower coal prices and lower freight charges making exports feasible.
