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Cement Sector Faces Dull November Dispatches but Shows Yearly Increase

Karachi, The cement industry in Pakistan witnessed a mixed performance in November 2023, with dispatches showing a decline, but an overall increase in the first five months of the fiscal year 2024. The latest report, the cement dispatches for November 2023 stood at 3.9 million tons, marking a 2% decrease both month-on-month and year-on-year. However, for the five-month period ending in November 2024 (5MFY24), the sector saw an 11% increase in dispatches, totaling 19.8 million tons, compared to the same period last year.

According to JS Global, the increase in yearly dispatches is attributed to a lower base in the previous year, which was impacted by floods. The industry is currently grappling with challenges such as rising material and labor costs, alongside high financing expenses, which are expected to keep cement volumes subdued in the near term.

Nevertheless, there is a silver lining for the sector with the 50% drop in Richard Bay coal prices since December 2022, driven by decreased global demand. This price drop may help in margin preservation for the cement industry, provided there is a relaxation in import restrictions and freight charges remain stable.

The analysis maintains an Overweight stance on the cement sector, citing its strong long-term fundamentals. Despite potential risks from prolonged weak demand, the sector is expected to remain a focal point of interest in the market. This mixed performance reflects the complex dynamics affecting the cement industry in Pakistan, balancing short-term challenges with long-term growth potential.

The post Cement Sector Faces Dull November Dispatches but Shows Yearly Increase appeared first on Pakistan Business News.