Cement sales decline by 8 per cent

Performance in February depicts initial signs of recovery.

KARACHI:

Cement sales for the first eight months of fiscal 2010-11 were recorded at 13.79 million tons, representing an eight per cent decrease, compared with the corresponding period of the preceding year, primarily due to unprecedented floods in July and August 2010, according to a research report.

However, February sales reflected initial signs of recovery as 1.78 million tons of cement were sold in the month, JS Global Capital said in the report on Tuesday.

Fewer working days in February, due to a shorter month and public holidays, led to a seven per cent month-on-month decline in local sales, while on a year-on-year basis, sales during the month remained flat. However, statistics show that average sales per working day actually rose by four per cent compared with January.

Exports in February rise

After a disappointing January, exports recovered by six per cent year-on-year and a massive 25 per cent month-on-month to 710,000 tons in February, as a result of increased sales to Afghanistan. However, unattractive price levels in other countries for local manufacturers led to exports declining by 15 per cent in the eight months compared with fiscal 2010.

What to expect

Eyeing a potential uptick in demand from March onwards, JS Global Capital analysts expect local sales to settle at 23 million tons, down by two per cent compared with the previous year. However, exports are anticipated to witness a larger decline of 16 per cent due to slowdown in global demand and increase in production in the region.

Analysts expect local dispatches to improve from March onwards, driven by improved liquidity of farmers, as well as the fact that the period between March and June has normally contributed 37 per cent to the industry’s annual sales.

Published in The Express Tribune, March 9^th, 2011.