It is rather a pity that the All Pakistan Cement Manufacturers Association (APCMA) has stopped updating their website or sending pressers with information about monthly sales. The last update was released for public viewing in Mar-19. It is a pity because the association was one of the few that regularly and voluntarily published its numbers each month without fail. It was a forward looking practice quite unseen in Pakistan. After all, transparency is not the greatest of virtues in the business community, so the association was setting an important precedent. It is also a pity because perhaps the sector is having a crisis of confidence, and when that happens, businesses want to keep their cards as close to the chest as they can.
It is also possible that some manufacturers may not want to disclose their numbers which makes industry collation difficult. Of course, it may be just an internal administrative issue; and let’s hope that is the case. Until we hear more, we will refrain from conjecture. In absence of that monthly data though, the past two months have been hazy (June data should be due any time soon). This data update was valuable because it kept the publics apprised of domestic and exports sales as well as the distribution of sales into different markets. It also showed the capacity that the industry had each month and total capacity utilization. It didn’t say how much cement each company was manufacturing, but that could be easily calculated given analysts’ understanding of market shares.
What we have now is the manufacturing number from the Pakistan Bureau of Statistics (PBS) under its Quantum Index of Large Scale Manufacturing Industries (QIM). In 10MFY19 (Jul-Apr19), production has fallen by 4 percent year on year, but grown by 4 percent in April-19 against April-18. Not too much has changed since March. This does not include the production and sales of clinker that the industry has restarted once again.
As for exports, PBS shows volumetric sales growth of 53 percent in 10MFY19 (July-Apr19) year on year, while in dollar terms, the growth is a tad lower—31 percent. The dollar per ton fetched this year for exports is down by 15 percent. In 11MFY19, PBS numbers report an increase in exports of 49 percent volumetrically and by 26 percent in dollar terms. The PBS and APCMA data differs slightly—PBS reported higher exports in the period of Jul-Mar19, compared to APCMA by 59,000 tons.
Such discrepancy aside, it is clear that despite higher growth in exports, production is down. The industry is suffering at the hands of lower domestic demand which is thinning. Manufacturers are adjusting their sales mix favourably toward exports that fetch lower prices in markets abroad, though that is increasingly difficult for some exporters located in the north zone sending their cement to India and Afghanistan. Both markets are less receptive than before. Moreover, greater price competition has caused a lot of volatility in certain domestic markets (read more: “Cement’s price and demand unrest”, May 31, 2019). This all does not paint a pretty picture for bottom-lines of cement manufacturers—which reflected in the 9M financials, and will fully reflect in the upcoming P/Ls for year-ending FY19.
We wish the industry best of luck and hope that they are forthcoming about industry data, so that analysts can spend less time digging and more time analyzing.