KARACHI - Local cement demand witnessed a decline of 13 percent Y-o-Y in FY09 at 19.4 million tons versus 22.4 million tons in FY08. According to the data released by the All Pakistan Cement Manufacturers Association (APCMA), Pakistan cement sector concluded FY09 with dismal sales performance by witnessing a meagre 2 percent Y-o-Y growth at 30.8m tons. The growth in overall cement sales mainly came from the record high cement exports during the year. After six years of consecutive YoY growth, the domestic cement market depicted a declining pattern in the wake of lukewarm construction activities amid economic slowdown, high interest rates, liquidity crunch and cut in infrastructure spending both in public and private sectors, during the year. During FY09, domestic cement plants operated at 74 percent capacity utilisation level as compared to 81 percent in the last year. The decline in utilisation level was mainly the function of lower domestic demand and addition of new capacities during the year. The utilisation for the domestic market stood at 46 percent as against the previous years level of 60 percent. On the other hand, the utilisation level for export sales recorded at 27 percent versus 21 percent in FY08. The rising export demand helped the local cement industry to operate at an optimum level during the year. With the shrinkage in domestic cement demand, Pakistans per capita cement consumption at the end of FY09 is recorded at 120kg versus 139kg a year earlier - representing a decline of 14 percent. The decline is solely due to the fall in domestic cement demand caused by the reason mentioned above. However, it is not expected that the per capita levels of cement would fall further. The current level of per capita cement consumption ranks Pakistan as one of the lowest penetrated markets in the region, therefore indicating a vast potential for cement demand growth in the longer run. As per the APCMA data, during FY09, cement industry witnessed additions of 5m tons capacity (7m tons in FY08). Now, the total cement production capacity of the industry stands at 42m tons as against the end-June level of 37m tons. Considering the fact that there is a direct relationship between the economic growth and cement demand of the country, Pakistans cement industry has started to bear the brunt of ongoing economic slowdown with a notable decline in domestic dispatches of the year. Local cement demand witnessed a decline of 13 percent Y-o-Y in FY09 at 19.4m tons versus 22.4m tons in FY08. Segregating the data, northern cement market recorded a decline of 17 percent at 15.9m tons whereas the southern market posted a growth of 4 percent at 3.5m tons during FY09. As far as dispatches of June 2009 is concerned, it remained 11 percent higher at 1.84m tons over the preceding months level of 1.65m tons. However, this still depicts a fall of 1 percent on Y-o-Y basis.