EUR 10.00 For Business Accounts Only

Pakistan Cement: Cement Dispatches to remain Flat during Dec 2018

• Pakistan cement dispatches are likely to close flat for Dec 2018 YoY, while compared to last month offtakes witnessed decline of 4% MoM due to winter season impact.
• Local dispatches are likely to record 3-7% YoY decline amidst economic slowdown in economy as witnessed by 4MFY19 Large Scale Manufacturing (LSM) numbers, which are down 0.65% YoY vs. +10% YoY in 4MFY18. Other than this, cut in Public Sector Development Program (PSDP) budget could also be a reason for muted sales of cement sector.
• Exports during Dec 2018 surged 79% YoY, mainly from south side as players are striving to export surplus inventory to avoid pricing pressure on domestic cement prices.
• In 1HFY19, total dispatches are likely to record 4% YoY increase, mainly on the back of stellar growth in exports. However, slowdown in local economy (where we expect FY19 GDP growth at 3% vs. 5.8% in FY18) is likely to keep domestic dispatches stagnant.
• We believe, due to weak macros and tightening monetary policy, local cement demand is likely to fall by up to 3% YoY in FY19. We remain wary of sector’s short term outlook owing to weak demand, higher input costs (PKR devaluation and inflationary pressure), higher interest rates while we also expect some price weakness ahead of upcoming expansions.