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Pakistan Cement: Winters to weigh in on cement sales in Nov-2020; Local sales likely to decline by 23-27% MoM, but up 2-6% YoY

• The onset of the winter season is likely to weigh in on cement sales in Nov-2020 as local dispatches are likely to fall by 23-27% MoM.
• The North region is expected to witness a contraction of ~25-29% MoM, while sales in the South are likely to fall by ~11-15% MoM.
• The sequential decline is likely to be higher than the past two years’ average decline of 15% MoM during the month of November.
• We believe this is the case because of restricted development work in the North region due to (1) early onset of the winter season and (2) increasing number of COVID-19 cases.
• That said, local sales are likely to be still up 2-6% YoY during Nov-2020.
• The exports are likely to decline by 1-3% MoM, while they are expected to be higher by 6-8% YoY.
• Industry utilization in Nov-2020 is expected to clock in at 82% vs. Oct-2020 utilization level of over 100% (adjusted for dead capacities of Flying Cement, Dewan Cement Hattar and Dandot Cement). 
• During 5MFY21, industry utilization is likely to clock in at 86%.
• Cement prices in the North region during Nov-2020 have averaged at Rs545/bag, down Rs5/bag.

In the South region, prices remained same as last month at Rs611/bag.