KARACHI – Analysts have viewed that the current year cement price surge, along with the fragile economic outlook, has dented the overall cement demand. Cement manufacturers, however, have still slashed prices in the northern part of the country, which may support cement offtake during the winter season at the cost of lower margins.
In addition, during the second half, export dispatches and local dispatches are likely to improve, hence better returns for cement manufacturers in the second half can be expected in contrast with the preceding half, said Bilal Asif at HMFS.
Cement dispatches have continued to post a submissive annual growth, largely attributed to battered economic conditions and overall inflationary trend in prices of construction material. The overall dispatches were recorded at 2.49 million tonnes in December compared to 2.68 million tonnes, down by an annual 6.9 percent. Contrarily, monthly dispatches posted a meager growth of 3.2 percent, contributed by exports growth and local growth of a monthly 3.7 percent and 3.1 percent respectively.
The overall dispatches for the first half of FY11 dwindled by an annual 11.2 percent and stood at 14.7 million. Local sales improved by 2.2 percent and reached 68.4 percent, hence reducing the share of exports to 31.4 percent for the first half of FY11.
In addition, exports exhibited a significant annual decline of 17 percent to reach 4.6 million tonnes from 5.6 million, while local dispatches reduced by 8.3 percent to 10.1 million tonnes. Capacity utilisation in December also reflected a bleak picture, standing at a dismal 67 percent in contrast with preceding year’s capacity utilisation of 71.9 percent. Furthermore, date capacity utilisation for the year which stood at 66 percent compared with the capacity utilization of 74.3 percent in 1HFY11, suggests lower demand was seen on both fronts.
