KARACHI: Cement dispatches (local sales and exports) in the fiscal year ended June 30, 2015 were 35.4 million tons, up 3.5% year-on-year compared to last year, Topline Securities said on Friday citing preliminary data.
In a report, Topline said the dispatches were in line with its expectations. On a month-on-month basis, total sales grew 9% to 3.3 million tons in June 2015.
Local sales posted a stellar growth of 8% year-on-year in FY15 to reach 28.3 million tons, better than the average growth of 5% seen in the last five years.
This was due to the increase in private sector expenditure on construction and housing, better security situation, improving macroeconomic indicators and higher government infrastructure spending.
On month-on-month basis, local sales grew 12% to a record 2.8 million tons in June.
The export dispatches in FY15 were down 12% year-on-year to 7.2 million tons, attributed to falling exports to Afghanistan owing to competition from low-priced Iranian cement and political instability in the country.
In June, export sales declined by 4% to 0.54 million tons over the previous month.
The report added the demand for cement in FY16 would improve further on the back of higher development spending (Rs1.5 trillion for FY16, up 27%), initiation of projects due to the China-Pakistan Economic Corridor, favourable macroeconomic indicators (average GDP growth of 5.5% expected in the next three years) and lower interest rate scenario (multi-decade low of 7%).
Additionally, higher disposable income, due to lower inflation (4.6% in FY15), will also boost private sector expenditure on construction and housing, as evident from the mega housing schemes launched by Bahria, Fazaia, DHA and UAE’s Emaar. “We anticipate cement sales to rise 9% in FY16 to reach 38.6 million tons while export sales to remain flat. Our channel checks suggest that going forward demand from Afghanistan is likely to improve due to ease in political situation,” the report said.
Published in The Express Tribune, July 4th, 2015.
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