Cement sales tumble 33% due to Ramazan

Anti-dumping duty slapped by S Africa also a factor.

KARACHI: Cement sales in the first month of 2015-16 fell 33% month-on-month (MoM) to 2.19 million tons, AHL Research reported on Friday.

According to preliminary figures, the plunge in overall sales came in the wake of a decline in domestic demand that dropped 36% MoM to 1.74 million tons while exports fell 17% to 499,000 tons.

Exports declined 27% MoM from the northern region, however, they increased 6% in the southern region. The drop was expected, albeit to a lesser extent, due to Ramazan when demand usually stood slow.

Other reasons behind the decline in sales included the low number of working days due to Eid holidays and a reduction in exports because of anti-dumping duty imposed by South Africa on Pakistani cement companies.

On a year-on-year (YoY) basis, total sales fell 11% in July, though demand rose 7% in the domestic market. However, exports dipped 24%.

In the northern region, local demand edged down 2% YoY during July to 1.47 million tons, while exports decreased 28% to 267,000 tons.

In the southern region, local and export sales recorded a decline of 24% and 19% YoY, respectively.

“Cement sales in August 2015 may remain depressed owing to floods, however, they will pick up going forward,” the research report added.

Weak coal

Steady cement prices (Rs519 per 50kg bag) along with weak coal prices ($57 per ton) have already pushed higher the gross margins of cement companies in the third quarter. A further increase in the margins is expected in the fourth quarter (April-June) results.

Published in The Express Tribune, August 1^st, 2015.

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