Karachi, October 10, 2022 (PPI-OT): Pakistan Cement: Local cement sales increased 31%MoM in Sep’22

Local cement dispatches for Sep’22 clocked in at 3.80mn tons, up 31%MoM, however declining by 5.3% on YoY basis. Both the regions witnessed a rather strong month with North and South witnessing an increase in sales of 25%MoM and 67%MoM, respectively.

Overall for 1QFY23, damaged severely by monsoon and devastating floods, local sales have decreased by 24%YoY to 8.60mn tons where local sales in North have remained depress at 7.26mn tons while sales in South have witnessed a decline of 25.3%YoY.

Richard Bay coal prices are currently trading at elevated levels of US$259/ton while FYTD average now stands at US$325/ton while effective average of coal prices for FY22 stood at US$214/ton. Moreover, recent development also suggest European countries are stockpiling coal to substitute natural gas for households during winter season.

We expect the sector to continue to remain in the limelight as the recent bout of currency appreciation and possible rate cut in policy rate could bring the cyclical sector right in the mix again. Therefore, we believe this would be a good opportunity to accumulate where once coal prices ease off, with the other fundamentals intact, the sector will be poised for good returns where our top picks are LUCK and MLCF.