LAHORE – The cement industry, which generally recorded stagnant sales for the past four years, has now shown signs of recovery as cement dispatches in December 2012 surged by 7.3 per cent YoY and 8 per cent MoM to 2.86 million tons.

Cement industry experts said that after incorporating December sales provisional figures, cumulative cement sales for 1HFY13 have registered at 15.99 million tons, up by 4.1 per cent YoY.

Furqan Ayub, an industry expert, observed that winter chill failed to dampen cement domestic sale in Dec, as volumetric growth to date is on the back of surge in local demand, stemming from aggressive infrastructure spending before the general elections in 2013.

He said that there are signs of recovery of cement industry, which had registered sluggish sales for a long time, resulting in huge financial losses. The industry suffered a net loss of Rs337 million in the first half of 2010-11 but earned a net profit of Rs4,300 million in the first half of 2011-12. According to latest reports, total sales during fiscal year 2011-12 increased to 32.515 million tons, showing an increase of 8.84pc in domestic sales.

This trend of domestic sales is expected to remain in momentum in future, given the present conditions.  Experts said that big groups have been making substantial profits, small cement producers continue to struggle to recover their operating costs.

The industry suffers rapid increases in input costs, unsustainable prices of energy that constitutes more than half of production cost and rising transportation cost. Yet, industry’s performance during past years in terms of capacity utilisation remained more than 70pc of installed capacity.

Experts said that currently, per capita consumption of cement in Pakistan is 131kg, one of the lowest even among developing countries, while world average is 273kg. To ensure future economic growth, Pakistan will need to invest considerably in its infrastructure development, despite the economic challenges it faces.

They further said that cement demand in any country is inextricably linked to the growth in GDP. Pakistan’s 3.70 GDP in 2011-12 was lowest in the region but it is projected as 4.30 in the current financial year, following some strong prospects of economic revival.

Major driver for cement consumption is infrastructure development and house-building projects. There has been an allocation of Rs873 billion under the Public Sector Development Programme (PSDP).