Cement dispatches for the first 10 months of fiscal 2013 have increased by 4% year-on-year. PHOTO: FILE
The Pakistan Muslim League-Nawaz’s (PML’s) traditional focus on infrastructural development and the positive economic outlook emerging after the general elections should also drive domestic cement sales in FY14, the report said.
Cement dispatches for the first 10 months of fiscal 2013 have increased by 4% year-on-year (YoY) to 27.6 million tons. Out of the total, local dispatches were up 6% YoY to 20.7 million tons, while exports declined 2% YoY to 6.9 million tons on account of lower sales to Afghanistan.
Local off-take witnessed a decline of 7% month-on-month (MoM) to 2.37 million tons during the month of April, mainly due to a temporary halt in construction activity due to the wheat harvesting season in the northern regions of the country.
At the same time, export dispatches were down 2% MoM to 0.76 million tons, bringing total April 2013 dispatches to 3.12mn tons, down 6%MoM, but up 4%YoY.
Outlook
“Going forward, taking our cue from PML-N’s traditional focus on infrastructure development, we foresee a rise in construction activity particularly across the northern region, which should drive domestic sales higher in FY14,” the note added.
Afghanistan has imposed additional taxes on cement imported from Pakistan, and competition from smuggled Iranian cement in the eastern neighbour may lead to a decline in exports to Afghanistan in the near-term, the note said.
The drop in exports to Afghanistan could hurt most cement companies situated in the northern region, especially DG Khan Cement, Cherat Cement and Fauji Cement.
“On the flipside, we foresee potential improved relations with India to potentially trigger improvement in cement exports to India, benefiting DG Khan, Maple Leaf and Lafarge Pakistan,” the note said.
Published in The Express Tribune, May 15th, 2013.
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