Pakistan’s Cement Sales in July 2023 remained dull as total volume of 3.2 million tons was booked, marking a 21% decline on a month-on-month basis. However, when considering the year-on-year comparison, the figures appear more favorable due to a lower base. The ongoing deceleration in construction projects can be attributed to the uncertain economic and political landscape. This environment has been aggravated by soaring inflation, which in turn has amplified the costs of essential materials, along with elevated financing expenses.
Positive aspect for cement companies rises from significant decrease of 46% in Global Coal Prices in this year. This drop can be attributed to a lackluster global demand coupled with improved supply.
The sluggish demand outlook is a result of mounting apprehensions regarding a potential global economic downturn and the endorsement of stricter carbon emission targets for the forthcoming years by coal-producing nations.
Also significant change in the industry dynamic is the fact that benchmark Richard Bay coal price has now fallen below that of Afghan coal used by cement manufacturers. Hence, Cement companies are expected to reap positive benefit.
The interplay of declining coal costs and higher cement prices in comparison to the previous year is anticipated to enhance gross margins for cement companies. However, it’s worth noting that any further escalation in power or gas tariffs might curtail these benefits for small cement companies.
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