Cement sales see surge in last month of 2013

Increase in demand despite higher prices reassures market.


Farhan Zaheer January 04, 2014
Analysts believe the increase in cement sales is an important one for the industry following recent price hikes. PHOTO: FILE

KARACHI:


Domestic cement dispatches in December 2013 hit 2.33 million tons – the highest-ever monthly sales – compared to 2.24 million tons in the same month of 2012, representing a 3.8% growth.


Similarly, total local dispatches during the first six months (July-December 2013) of fiscal year 2013-14 remained 11.98 million tons compared to 11.73 million tons during the same period last fiscal year, an increase of 2.1%.

“It is quite visible that construction activities in big cities have picked up in the last few months,” said Topline Securities analyst Asad Siddiqui. “Big projects are coming up, while leftover ones have also been revived, which has helped local cement sales.”

Analysts believe the increase in cement sales is an important one for the industry following recent price hikes. Cement companies have significantly increased prices in the last few months, leading to fears that it may dampen sales.

However, prices have gradually moved up in the last three months, showing an increase of 4-5% since the last week of September 2013. Prices in the southern zone (Sindh-Balochistan) have reached Rs520-530 per a 50-kg bag, while prices in the northern zone (Punjab-Khyber Pakhtunkhwa) have jumped to Rs495-505.

“Increase in cement sales is a good sign for cement stocks. This shows that demand is still increasing despite cement prices.”

However, some think otherwise. “It’s good that cement demand has increased in December 2013 after low sales in the last two months,” JS Global Capital analyst Atif Zafar said. “But this growth is not extraordinary considering the upsurge in economic activities we saw in the last three four months.”

Another positive aspect for the local industry is that cement exports have shown some improvement in December 2013 after continuous decline during the first five months of the current fiscal year. In December 2013, export volumes increased to 625,000 tons compared to 580,000 tons during December 2012, a significant growth of 7.8%.

However, despite the increase in the last month, exports for the first six months of the current fiscal year remained under pressure and declined by 1.8% to 4.15 million tons, compared to 4.22 million tons in the same period of the previous year.

But even after the offsetting 1.8% decline in exports, total cement sales showed a marginal growth of 1.1% during the first six months of the current fiscal over the same period during the last fiscal year.

“Cement sales in December 2013 and in the first six months of the current fiscal year saw the highest-ever domestic dispatches in the country,” according to the spokesperson for the All Pakistan Cement Manufacturers Association (APCMA).

The spokesperson said that exports to India have so far not materialised and remained only 0.202 million tons during the last six months, a 3.25% decline year on year and well below the cement sector’s expectations.

“Exports to India in fact have been on a constant decline ever since the two countries opened their borders for liberal bilateral trade. The decline is not due to lack of cement demand in India but because of non-tariff barriers by our neighbour,” he said.

However, some industry officials believe that Pakistan’s cement exports to India have primarily declined because of low economic activities in the neighbouring country and bad marketing by companies here.

During the last six months, cement exports to Afghanistan declined by 14.37%, numbering 2.065 million tons. While exports to other destinations through sea increased by a significant 17.18% to 1.878 million tons in the same period, from 1.603 million tons during the same period last year.

In the last budget, cement had been brought within the purview of ‘3rd Schedule’ of the Sales Tax Act 1990, which increased the overall taxes on the industry.

Published in The Express Tribune, January 5th, 2014.

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COMMENTS (3)

Responder | 10 years ago | Reply

Don't worry this "Atheist_Pakistani" does not know what Financial Statements are, how shares are valued.............

Bhai comments se pehlay yeh to daikh laitay k loss mai kon se company hai agar hai to kyun?????????????

Atheist_Pakistani | 10 years ago | Reply

Funny yet these companies are in 'loss' according to their shares. They really enjoy fostering their financial details publically. Absolute corrupt. Cement cartel at its best in Pakistan. Exploiting dirt cheap natural gas and raw material using 1920s machinery and than complaining about gas shortages and what not excuses for them not being able to compete internationally.

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