Karachi: The cement industry in Pakistan recorded a significant drop in dispatches in August 2024, with volumes falling to 3.37 million tons, marking a 26% decline from the previous year. This downturn is primarily attributed to reduced construction activities, severely impacted by the heavy monsoon rains across the country.

According to AKD Securities Limited, the slowdown in construction due to adverse weather conditions has been further compounded by a rise in cement prices in the North, which increased by PKR 43 per bag last month following a hike in royalty rates by the Punjab Government. The average price per bag now stands at approximately PKR 1,530.

Despite the current challenges, AKD Securities maintains a cautious outlook for the local cement market, projecting a slight decline in demand by 2-2.5% year-on-year for the fiscal year 2025. However, an uptick in cement exports is expected, which could offset some of the domestic shortfall, leading to an anticipated flat annual performance in total cement offtakes.

Investment preferences within the sector favor companies like LUCK, FCCL, and MLCF. Additionally, firms with higher leverage may attract attention in the context of the ongoing monetary easing, including DGKC and POWER, suggesting varied investor opportunities in the cement sector amid prevailing economic conditions.