EUR 5.00 For Business Accounts Only

Pakistan Cement: Sales to fall 23-25% YoY in Apr-2020 amidst lockdown; Local sales may recover 2% MoM as restrictions ease in North

• Hit by COVID-19, Pak Cement sales are expected to drop by 23-25% YoY in Apr-2020, with local sales likely to decline by 18-20% YoY, whereas exports are anticipated to fall by 62-64% YoY.
• However, local cements dispatches in Apr-2020 are likely to improve over Mar-2020 by 1-3% MoM due to the resumption of construction activities in the Northern region (+6-8% MoM). Another factor contributing to higher MoM offtake is likely to be pre-buying ahead of an anticipated Rs40-50/bag increase in cement prices.
• With lockdown remaining relatively harsher in the South, the dispatches are likely to further drop by 30-32% MoM.
• Exports are also unlikely to fare well, and are expected to drop by 57-59% MoM.
• Historically, sales in April remain lower than March (10-year average MoM decline of 5% in local dispatches) due to the onset of wheat harvesting season which slows down construction activities as labor moves back to their villages during that period.
• During 10MFY20, total sales growth is likely to be around ~3% YoY with local sales depicting a meagre 1% YoY growth while exports are likely to grow by 3% YoY.
• MLCF and PIOC continue to outperform peers, with local sales up 15% YoY and 24% YoY in Apr-2020, respectively.

According to PBS data, average cement prices in North region in the last week of Apr-2020 clocked in at Rs520/bag from ~Rs500 in Mar-2020. Prices in various regions of North increased in the range of Rs10-60/bag. Similarly, prices in South region remained unchanged at Rs620-630/ bag.