Displaying items by tag: Pakistan
Pakistan: The cement industry saw a slight decrease in cement dispatches in April 2024, falling to 2.94Mt from 2.95Mt in April 2023, according to data from the All Pakistan Cement Manufacturers Association. Despite an 8% fall in local sales to 2.33Mt, an increase in exports by 46% to 614,264t in April 2024 partially offset this decline. Specifically, north-based plants saw a 4.8% reduction in dispatches to 2.1Mt in April 2024, while south-based plants experienced a 12.7% year-on-year increase to 854,911t. Export volumes also reflected regional differences, with north-based exports increasing by 73% and south-based by 39%.
In the 2024 financial year so far, total cement dispatches have risen by 2.5% to 37.5Mt, driven by a 65.4% increase in export dispatches to 5.72Mt compared to April 2023. However, domestic sales have declined by 4.1% to 31.7Mt. The north-based plants dispatched 26.2Mt domestically, a 3.6% year-on-year decrease, while south-based plants dispatched 5.55Mt, down by 6.5% from April 2023.
A spokesman for the All Pakistan Cement Manufacturers Association said "The government needs to announce industry-friendly measures in the upcoming budget that can boost construction activities in the country. We need to increase our capacity utilisation to bring in economies of scale and to control our operations costs in order to reduce the overall impact on the end consumer.”
Pakistan: Lucky Cement disclosed a decrease in profit for the third quarter of the 2024 financial year, due to shrinking gross margins and a fall in cement sales, according to Pakistan Press International. The company's unconsolidated earnings decreased by 27% from the previous quarter. Gross margins narrowed from 36% to 28.8%, impacted by higher coal prices, increased power costs and a shift towards clinker exports which resulted in a 10% quarterly drop in cement sales volumes. Overall revenue declined to U$98.7m. Despite this, Lucky Cement's earnings over the first nine months of the fiscal year 2024 have grown by 67% year-on-year, supported by higher gross margins and increased income from higher interest rates and dividends from Lucky Cement Investments.
Pakistan: Thatta Cement’s sales were US$19.6m in the nine-month period up to 31 March 2024, up by 38% from nine-month levels in the previous financial year. The producer’s cost of sales climbed by 12% to US$14.3m. Thatta Cement succeeded in raising its profit by a factor of eight to US$2.64m.
Pakistan: Fecto Cement recorded US$98.5m in sales in the first nine months of the 2024 financial year (FY24). This corresponds to a year-on-year rise of 26%. The company’s cost of sales was US$87.9m, up by 18% from nine-month FY23 levels. Its profit after was tax was US$2.51m, compared to a loss of US$13.8m.
Pakistan: Maple Leaf Cement recorded US$182m in sales in the first nine months of 2024, up by 8% year-on-year from US$169m in the first nine months of the previous financial year. Its cost of sales also rose by 8%, to US$124m from US$115m. As such, the producer recovered a profit after tax of US$19.3m, down by 13% from US$22.2m.
Maple Leaf Cement concluded a buyback of its shares on 24 April 2024, giving the company revised paid-up capital of US$37.7m.
Update on Pakistan, April 2024
24 April 2024Changes are underway in South Asia’s second largest cement sector, with two legal developments that affect the industry set in motion in the past week. At a national level, the Competition Commission of Pakistan recommended that the government require cement producers to include production and expiry dates on the labels of bagged cement. Meanwhile, in Pakistan’s largest province, Punjab, a new law tightened procedures around the establishment and expansion of cement plants. At the same time, the country’s cement producers began to publish their financial results for the first nine months of the 2024 financial year (FY2024).
During the nine-month period up to 31 March 2024, the Pakistani cement industry sold 34.5Mt of cement, up by 3% year-on-year. Producers have responded to the growth with capacity expansions, including the launch of the new 1.3Mt/yr Line 3 of Attock Cement’s Hub cement plant in Balochistan on 17 April 2023. China-based contractor Hefei Cement Research & Design executed the project, including installation of a Loesche LM 56.3+3 CS vertical roller mill, giving the Hub plant a new, expanded capacity of 3Mt/yr.
Pressure has eased on the operating costs of Pakistani cement production, as inflation slowed and the country received a new government in March 2024, following political unrest in 2022 and 2023. Coal prices also settled back to 2019 levels, after prolonged agitation. Pakistan Today News reported the value of future coal supply contracts as US$93/t for June 2024, down by 2% over six months from US$95/t for January 2024.
Nonetheless, cost optimisation remained a ‘strong focus’ in the growth strategy of Fauji Cement, which switched to using local and Afghan coal at its plants during the past nine months. Its reliance on captive power rose to 60% of consumption, thanks to its commissioning of new waste heat recovery and solar power capacity. During the first nine months of FY2024, the company’s year-on-year sales growth of 14% narrowly offset cost growth of 13%, leaving it with net profit growth of 1%.
Looking more closely, the latest sales data from the All Pakistan Cement Manufacturers Association (APCMA) shows a stark divergence within cement producers’ markets. While exports recorded 68% year-on-year growth to 5.1Mt, domestic sales fell, by 4% to 29.4Mt. The association further breaks down Pakistani cement sales data into South Pakistan (Balochistan and Sindh) and North Pakistan (all other regions). Domestic sales dropped most sharply in South Pakistan, by 6% to 5.16Mt. In the North, they dropped by 3% to 24.2Mt. Part of the reason was a high base of comparison, following flooding-related reconstruction work nationally during the 2023 financial year. Meanwhile, the government finished rolling out track-and-trace on all cement despatches during the opening months of the current financial year, and commenced the implementation of axle load requirements for cement trucks. APCMA flagged both policies as potentially disruptive to its members’ domestic deliveries, amid a strong infrastructure project pipeline.
Pakistani producers suffer from overcapacity, but have established themselves as an important force in the global export market. They continue to locate new markets, including the UK in January 2024. Lucky Cement was among leading exporters overall, with a large share of its orders originating from Africa.
On 17 April 2024, the government of Punjab province set up a committee to assess new proposed cement projects, with the ultimate goal of conserving water. Falling water tables are considered a significant economic threat in agricultural Punjab. Besides completing an inspection by the new committee, proposed projects must also secure clearance from six different provincial government departments and the local government. While acknowledging the necessity of the cement industry, the government insisted that it will take legal action against any cement plant that exceeds water allowances.
Pakistan’s cement plants have grown in anticipation of a local market boom. Without this strong core of sales, underutilisation will remain troublesome, especially in North Pakistan where exposure is highest. At the same time, APCMA has given expression to the perceived lack of support affecting production and distribution. For an industry with expansionist aims, new restrictions on its growth and operations can feel like an existential menace.
Pakistan: Fauji Cement raised its sales by 14% year-on-year to US$213m in the first nine months of the 2024 financial year. Throughout the period, which ended on 31 March 2024, Fauji Cement recorded a cost of sales of US$148m, up by 13% from nine-month 2023 financial year levels. Its profit was US$25.3m, up by 1% from US$25m in the corresponding period of the previous financial year.
Pakistan: On 18 April 2024, the Sustainable Development Policy Institute (SDPI) and the Policy Research Institute for Equitable Development (PRIED) launched two studies focusing on the decarbonisation of Pakistan's cement sector. The initiative focuses on collaboration and technology sharing to reduce the industry's carbon footprint.
Professor Muhammad Fahim Khokhar from the National University of Science and Technology (NUST) said "The global CO₂ emissions released from the cement sector are 37.4Gt, which is rising at 1.1% per year."
The study by PRIED and NUST showed a 30% increase in cement sector CO₂ emissions in 2020 relative to 1990-2000, reaching 49.6Mt/yr. The study proposed strategies for cement sector decarbonisation, such as alternative fuels, clinker substitution, renewable energy, process electrification, energy efficiency and carbon capture technologies.
According to researcher Saleha Qureshi, the major challenge for decarbonisation is that cement industries in Pakistan rely on over 65% coal in the calcination process. Other challenges identified were lack of regulatory and policy support, absence of performance-based standards, high transition cost and limited incentive available for the transition.
Pakistan: Fauji Cement Company (FCC) and DG Khan Cement Company (DGKC) are expected to reveal mixed financial results for the third quarter of the 2024 financial year. FCCL expects a decline in earnings due to increased depreciation expenses from a new cement line, forecasting a quarterly revenue of US$69.7m, down by 3% year-on-year. In contrast, DGKC anticipates improved earnings of US$2.6m, an 84% increase in earnings from the previous quarter, helped by lower repair, fuel and power costs. DGKC's expected revenue stands at US$47.8m, marking a 27% drop. Both companies have noted a sequential decline in local cement dispatches, indicating ongoing market challenges.
Punjab government to amend Local Government Act for establishment of new cement plants
18 April 2024Pakistan: The Punjab government has decided to amend the Local Government Act 2022 to remove discrepancies and has called for proposals from all relevant departments. It aims to ensure that all necessary clearances are obtained before approving the establishment of new cement plants, according to Pakistan Official News. Due to water shortages, expansions or new establishments of cement plants must undergo a feasibility study. Committee members will personally inspect sites for the approval of these plants and the Irrigation Department will pursue legal action against any cement plants exceeding prescribed water usage limits.