Daily Times

The country’s total cement sales in June are expected to increase by 11-15pc YoY and 30-34pc MoM to 5.1 to 5.3million tons, reaching utilization of around 93pc (adjusted for closed capacities).

In absolute terms total June 2021 cement sales are likely to be the third highest monthly sales in history of Pakistan.

Previously, October 2020 witnessed sales of 5.73mn tons and March 2021 recorded sales of 5.37mn tons.

The 11-15pc YoY growth in total cement sales is likely due to strong demand from private sector construction and initiation of work on dams, while 30-34pc MoM increase in total cement sales during June 2021 is due to lesser number of working days in May 2021 amidst extended Eid holidays.

Shankar Talreja, a deputy head of research at Topline Securities, said that local cement sales are expected at around 4.6-4.8mn tons, up 20-24pc YoY and 45-49pc MoM.

“South is expected to post robust growth of 75-85pc YoY and 63-69pc MoM. Local utilization in June 2021 is expected at 83%, whereas North’s utilization is likely to be at 89pc and South at 60pc,” Talreja added.

He maintains that export sales during June-2021 are likely to decline on both MoM and YoY basis, due to higher local sales both in South and North regions.

Cement retail prices during June 2021 have averaged at Rs623 per bag in North, up Rs20 per bag from May 2021 levels.

Talreja said that in the South, retail prices remained in the range of Rs640-650 per bag, up Rs10 per bag compared to last month.

He predicted that the cement prices in 1H of July 2021 are likely to increase by Rs20 per bag in the North region (likely to be staggered), as per our channel checks.

“Cement prices are also likely to increase by Rs20-25 (possibly in one go) in the South region during 1H of July 2021 due to significant rise in coal, diesel and furnace oil prices,” he added.

During FY21, cement sales are expected to clock in at 57.4million tons, up 20pc YoY – highest in 14 years and also higher than the last 15 years CAGR of 7.8pc.

For Talreja, sharp rebound in cement sales is due to stagnant growth in previous years and significant recovery in construction activities after fiscal push by the government in the form of amnesty, markup scheme among others.

Whereas, capacity utilization during FY21 is likely to clock in at 85pc, up from 75pc in FY20.