With higher allocation for Public Sector Development Programme and China Pakistan Economic Corridor (CPEC), the outlook for cement and construction-related industries is positive. Industry sources said the government has allocated Rs 1,675 billion for PSDP in FY17, which is 20 percent higher than last year.
In the current scenario, when the government has allocated a higher budget for development and housing sector is thriving, domestic cement demand is likely to further increase in coming months. Specifically, hydel power plants including Kohala Hydel and Soki Kinari projects and transport infrastructure projects would stimulate cement demand in the country, they added.
Further impetus to demand would come from rapid urbanisation and the related development of mega housing projects. As per Economic Survey 2015-16 the rural-urban mix for the country has shifted from 65:35 in 2005 to 60:40 in 2016. More importantly, the demand pressures may continue going forward due to persistent housing shortages. According to estimates, the housing shortage in the country stood at 9 million units in 2014 and for bridging this gap would require huge quantity of cement and related construction materials.
They said that low per capita cement usage in the country also adds upside to cement demand. Ahead of expected demand, several cement plants have all formally announced their plans to enhance their annual manufacturing capacity aimed to cater the future demand of cement.
Major cement producers have announced expansion plans for 9.7 million tons, which would enhance total capacity to 55.3 million tons per annum compared to present capacity of some 44 million tons per annum. Industry sources said that some demand from CPEC projects is also likely to arrive in coming days, therefore cement plants have initiated expansion plans to meet the rising demand. However, cement exports are presently on the lower side and they are expecting no major changes in external demand.