Karachi, April 07, 2022 (PPI-OT): Pakistan Cement: Cement dispatches remain strong

Local cement dispatches for Mar’22 clocked in at 4.7mn tons, up 4.1/20.1% YoY/MoM. South took the lead with an increase of 19.1/21.2% YoY/MoM where we believe pre-buying in anticipation of price increase played a part while on sequential basis, increased numbers of working days also provided some uplift.

Exports from North stood out for Mar’22 with an increase of 2.6/6.6x YoY/MoM majorly arising from Afghanistan, in our opinion. On the other hand, export from South posted a dismal performance with a decline of 59.5/41.1% YoY/MoM as increasing coal prices have made exports infeasible on current prices.

After touching a high of USD460/ton, coal prices cooled down and hovered around USD250/ton for a while in search of equilibrium. However, the recent ban by Europe on coal imports from Russia has provided new impetus to prices and they have increased by 12% in last four days, standing currently at USD280/ton.

The volatility in coal prices and stock prices of our AKD Cement Universe provide a good entry point, in our opinion, as medium to long term outlook still remains intact. More than international coal prices, we believe local economic and political uncertainty has remained a major drag and once clarity emerges, cement sector will lead the rally.