The dispatches of cement sector during the month of September showed an impressive growth of 13 percent Year-on-year compared to corresponding month last year, said the analysts at InvestCap Research in its latest report issued Wednesday.
Quoting industry sources, the report said the increase in monthly sales was expected to be a result of 19%YoY hike in local dispatches to stand at 1,778k tons.
The local dispatches from South are expected to grow by 53%YoY.
According to InvestCap analyst Sanam Rasool, this is primarily due to boom in construction activities on the back of spurring housing demand coupled with government infrastructure spending (flood reconstruction).
Exports on the other hand, she said, were expected to reflect a flattish trend during Sep-12 and register a marginal increase of 2%YoY as manufacturers have started orienting their sales on the local front amid higher local demand and impressive local retention prices; enduring an increase of 19%YoY to Rs6,988/ton.
The cement dispatches for 1QFY13 are expected to clock in at 7,678ktons, up by meager 2%YoY due monsoon effect. The growth in total dispatches is expected to stem primarily from 5%YoY increment in local dispatches, which are expected to clock in at 5,419k tons.
“This is particularly due to surging real estate demand coupled with increased construction activities,” said Sanam. Hence, she said, local dispatches from south are expected to witness a surge of 17%YoY to 1,110k tons during the said quarter. Exports are expected to dampen by 3%YoY during the period under review due to spike in inland transportation cost incurred by the firms coupled with lower demand on the export front and unattractive export prices.
As mentioned above, the real estate market is back in the limelight after years of hibernation, due to surge in remittances and increased urbanization.
Despite higher cement prices, downward revision in cost of borrowing due to monetary easing is expected to pull down the over all cost of different projects and is expected to rejuvenate construction activities as a result.
This is foreseen to act as an impetus for increased cement demand going forward. The approaching winter season is expected to subdue cement demand, however, post winter, demand is expected to escalate. This, according to Sanam, was mainly because the government is likely to increase infrastructural development spending in the run-up to the upcoming general elections.
