The cement sector is to maintain steady growth in the new fiscal year because of higher local demand and exports to Afghanistan as the companies are still utilising 90 percent of their installed capacity.
Growth in cement dispatches continues to dazzle everyone. After 15 percent growth in FY03, cement dispatches have again witnessed double-digit growth and increased by 19.5 percent during FY04.
The total cement dispatches during FY04 have increased to 13.6 million tons compared to 11.4 million tons during FY03. Capacity utilisation that was 70 percent during FY03 has risen to 81 percent in FY04.
Increase in cement demand is primarily being generated from housing sector boom. Besides, the massive demand from public infrastructure projects and export to Afghanistan has also boosted cement sales.
According to a report prepared by Invest Capital Securities, during the last month of FY04, that is June, local and export cement dispatches have increased by 13 percent compared to the previous month and 39 percent compared to June FY03. Cement exports during the month were also very strong and were the second highest on monthly basis at 132,000 tons.
Based on the latest available data, DG Khan has remained the largest cement manufacturer in the country. DG Khan sold 1.49m tons of cement, which includes 0.17m tons of exports.
Accompanying our report is a company-wise table of cement dispatches during FY04. At a time when companies are allocated quota based on their installed capacity, DG Khan was bound to be the largest cement manufacturer in the country.
In terms of overall capacity utilisation, there were two companies; one in the north zone and one in the south zone, that operated at levels over 100 percent. These were Cherat and the recently privatised Thatta Cement.
The brokerage house expects cement sector dispatches during FY05 to reach 14.8 million-15.0 million tons.
Cement sector is currently operating above 90 percent capacity and demand supply is pretty much in equilibrium. It will be interesting to see how demand shapes up during monsoon months of July-August, as sales are a bit slack during monsoon. FY05 will also be a good year for cement companies and we expect demand to show 10 percent growth.
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FY 04 CEMENT DISPATCHES OF SELECTED COMPANIES
(000 TONS) LOCAL EXPORT TOTAL UTILISATION (%)
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Attock 574 30 604 79.9
Cherat 598 191 789 100.3
Dadabhoy 350 - 350 66.0
Dandot 296 - 296 58.8
DG Khan 1,317 170 1,487 85.8
Fauji 719 113 832 88.1
Gharibwal 426 - 426 75.2
Kohat 423 111 535 94.3
Lucky 1,003 117 1,120 84.9
Maple Leaf 1,127 - 1,127 73.5
Pioneer 479 3 482 76.5
Saadi 432 1 433 76.4
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