Business

Cement sales drop 12 per cent

Prices expected to jump following international coal rates.

Faseeh Mangi December 07, 2010

KARACHI: Cement sales fell by 12 per cent on a yearly basis to 12.2 million tons in the first five months of fiscal year 2011 compared with 13.9 million tons last year.

Slowdown in demand amid recent floods remained the major reason behind the decline in local dispatches, said Topline Securities analyst Furqan Punjani.

The break-up shows that exports fell by 19 per cent to a two-year low of 3.9 million tons during the period against 4.8 million tons while local dispatches fell by 9 per cent to 8.3 million tons compared with 9.1 million tons in the same period last year.

The decline in exports was due to a fall in sales to the Middle East and complete halt in exports to India amid the expiry of BIS (Bureau of Indian Standards) quality assurance certificate, added Punjani.

Cement sales for November declined by four per cent on a yearly basis to around 2.4 million tons compared with 2.5 million tons in the same period last year as per information gathered from industry sources.

Cement sales are expected to improve from January 2011 with major contribution from local demand once post-flood reconstruction activities begin, said Punjani.

Prices on the rise

Floods in Australia, the world’s biggest exporter of coal, have caused production disruptions from mines in Queensland. This has resulted in an upward pressure on international coal prices, which have shot up eight per cent to $117 per ton, highest since October 2008.

The rising prices remain a concern for the local cement manufacturers which so far this year have averaged $97 per ton but are expected to touch $102 per ton by the end of the year in June 2011, said JS Global Capital analyst Syed Atif Zafar.

Coal, essential for cement making, would push cement prices to around Rs355 per 40kg bag in the next two months from the current Rs330-340 per bag, informed Zafar.

Lucky Cement is likely to be the least affected due to a long-term contract with its suppliers, added Zafar.

Published in The Express Tribune, December 8^th, 2010.

COMMENTS (1)

Mirza Sheeraz | 13 years ago | Reply I would say the decrese in cement sales is mainly due to lack of public and private sector investment. There is no (minimum) foreign investment due to the unreliable government, political stress and worse law and order situation within the country. Pakistan has power crises, gas crisis, food crisis ..... we are in crisis, our situation is not such to attract the foreign investments. Govt. yet not released the PSDP fund of 663 billion for year 2010-11, even slashed half in the aftermath of the floods. There is need to built dams to produce electricity and water to agricultural lands. Cement prices are fluctualting and may decrease in comming months due to winter season (very limited construction activities). Cost of producing and sell cement is increasing day by day in Pakistan, cement sector trying to survive in the worse economic conditions.

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