KARACHI: Construction activities appeared to have revived in the first quarter of FY24 following a 17.7 per cent jump in domestic cement sales to 10.122 million tonnes from 8.602m tonnes in the same period last fiscal year.

Exports during 3MFY24 posted a whooping growth of 72pc to 1.751m tonnes from 1.019n tonnes due to rupee devaluation during July-Aug 2023.

As a result, total cement despatches (local and export) grew by 23.4pc to 11.873m tonnes from 9.621m tonnes in 3MFY23.

A cement exporter/manufacturer said cement exports have been made to Sri Lanka, Bangladesh, and West Africa.

Demand for urea and DAP surges, inventory drops in September

Domestic cement sales were strong during July-Sept 2023 as there were floods in July-Aug 2022.

Due to rising construction activities, steel bar makers raised prices by Rs10,000 per tonne in Aug, with hints of another increase in the last week of Sept, despite the rupee appreciating since Sept 5.

In Sept 2023, total cement despatches (domestic and export) were 4.115m tonnes as against 4.284m tonnes in the same month 2022, down by 4pc.

Local sales in Sept 2023 were 3.544m tonnes, a 7pc decline due to rains in northern parts of the country and transportation issues caused by crop cultivation. Meanwhile, exports increased by 19.24pc, rising from 478,097 tonnes in Sept 2022 to 570,101 tonnes in Sept 2023.

A spokesperson from the All Pakistan Cement Manufacturers Association (APCMA) highlighted the need for government relief in duties and taxes to reduce production costs and make the product competitive in international markets. He emphasised the importance of abolishing the 5pc import duty on coal and expressed concerns about rising power tariffs and petroleum prices.

Pakistan’s listed cement sector reported after-tax earnings (PAT) of Rs51bn in FY23, a 3pc decrease compared to the 8pc growth in FY22. This decline was primarily due to higher tax expenses amid implementation of a 10pc super tax.

Fahad Hussain Khan of Top Line Securities said that the cement sector recorded pre-tax earnings (PBT) of Rs100bn, up 11pc despite a 16pc YoY fall in total cement dispatches and a 78pc YoY increase in finance costs.

The PBT improvement is primarily due to an increase in sales by 21pc YoY to Rs590bn in FY23 led by 37pc YoY increase in cement prices, he said.

Urea/DAP offtake

Urea sales in Sept 2023 reached 530,000 tonnes, up 4pc YoY from 508,000 tonnes in Sept 2022 but down 18pc MoM due to seasonal factors.

According to Topline Securities, urea sales in 9M2023 totalled 4,911,000 tonnes compared to 4,770,000 tonnes in the same period in 2022, reflecting a 3pc YoY increase. The closing inventory of urea in Sept 2023 was around 80,000 tonnes, down from 87,000 tonnes in Aug 2023.

Total DAP sales in Sept 2023 rose by 71pc to 107,000 tonnes due to the low base of last year, while MoM sales were down 59pc due to seasonal factors. This takes 9M2023 DAP sales to 1,002,000 tonnes, up by 36pc YoY.The closing inventory of DAP was around 20,000 tonnes in Sept 2023 from 40,000 tonnes in August.

Published in Dawn, October 4th, 2023