Karachi, February 08, 2023 (PPI-OT): Pakistan Cement: Cement dispatches for Jan’23 witnessed slight recovery

Local cement dispatches for Jan’23 clocked in at 3.59mn tons, changed by -2.4%/+5.5% MoM/YoY. Region-wise, North witnessed an increase of 5.5%YoY to 2.86mn tons against 2.71mn tons in SPLY in local sales. While, domestic offtakes in the South increased by 1.5%/5.4% MoM/YoY with sales of 0.73mn tons vs 0.72/0.68mn tons in Dec’22/Jan’22.

Richard Bay coal prices have recently witnessed a dip, currently hovering at US$150/ton vs average of US$232/168/ton in Dec’23/CYTD. In case, coal prices further move down to US$120/ton, exports are expected to increase as export prices become much viable.

With an overall shift in macro-policy focus from growth in previous years to consolidation, we expect sector volumes to decline by ~17-18% for FY23.

Overall, companies with timely expansions and relatively less debt on their books may remain better off in the near term, for this reason we continue to advocate LUCK and MLCF on the back of timely expansions, low leverage and better production efficiencies contributing to their margins going forward.