Construction Boom Sets New Record For Cement Sales in Pakistan

Domestic cement sales are up 9% year-over-year for the first 7 months of Pakistan's Fiscal 2014-15, according to media reports.  Overall, cement industry reports cement shipment of over 20 million tons in 7 months, a 6% annual increase with rising domestic demand offsetting falling exports due to weakness abroad.

Market capitalization of  Pakistani cement companies has jumped 70% last year, about 3 times more than the KSE-100 market index which rose 27% in 2014. This is the third consecutive year that cement companies have outperformed the broader market. Investors in Pakistan's cement sector have seen 600% rise in the last three years.

It appears that construction  sector is getting a boost from falling inflation and declining interest rates with a big drop in world oil prices. Domestic sales of 2.5 million tons a month translate to about 160 Kg per capita consumption of cement, the highest level in Pakistan's history.

Pakistan saw its domestic cement consumption double from about 11 million tons in 2003 to 22 million tons in 2008 on President Musharraf's watch. It remained essentially flat from 2009 through 2011 before rising to a new high of 24 million tons in 2012. With expected GDP annual growth to average 4.5-5.5 per cent over the next 3 years, local cement sales could rise by 9 per cent on average annually to reach 34 million tons per year by 2017 and exports to 8 million tons per year.

Cement sales and building activity indicators are an important sign of the strength or weakness of the broader economy, due to construction's important role in the economic sector. If individuals and businesses are willing to invest in new construction, it is a sign that the economy is doing well or poised to recover. If they aren't, the economy may be weak or headed for trouble. Construction is a very labor-intensive activity which creates many new jobs. Higher employment drives consumer spending which further stimulates the national economy.

In addition to rising demand for housing and new commercial real-estate, major infrastructure and energy projects related to the China-Pakistan Industrial Corridor are expected to significantly boost domestic cement consumption and create millions of new jobs over the next several years.

Related Links:

Haq's Musings

State Bank: Pakistan's Actual GDP Higher Than Official Figures

Investors Bullish on Pakistan Cement Sector

Pakistan Ranks in the Middle For Infrastructure and Logistics

China-Pakistan Industrial Corridor

India Fudging GDP to Claim Faster Growth Than China?

India-Pakistan Economic Comparison 2014


Riaz Haq said…
The State Bank of Pakistan (SBP) submitted its first quarterly report of fiscal year 2014-15 (FY15) titled “The State of Pakistan’s Economy” to parliament on Tuesday.
The report says that Pakistan’s economy faced several challenges in the initial months of FY15 as the fourth review of the Extended Fund Facility (EFF) could not be finalised in early-August meetings with the International Monetary Fund (IMF).
The report also refers to political events in mid-August in Islamabad that impacted economic activity in the country. In September, floods inundated a large part of agriculture land in Punjab. It was feared these losses may push the price of perishable food items up, which fuelled inflationary expectations.
“Against this backdrop, key macroeconomic indicators could not follow up positive developments observed in the second half of FY14,” says the report. “1QFY15 saw higher deficits in the current and fiscal accounts, which had to be financed via domestic resources.”
However, there has been a marked improvement in the economy during the second quarter of FY15, which is likely to persist through the rest of the year.
Highlighting developments in the external sector during 1QFY15, the report says, “Overall trade deficit increased by $1.6 billion in 1QFY15, compared to the same period last year.” This increase was partly compensated by a $765 million increase in home remittances during the quarter.
The report avers that the rising current account deficit, coupled with the uncertainty in the foreign exchange market, was one of the key factors that guided the SBP’s decision to keep the monetary policy tight during July to September 2014.
Government borrowings remained lower during 1QFY15 compared to last year because loans were taken from other sources like PIBs and National Savings Schemes. “Within the banking system, instead of borrowing from the central bank, the government borrowed from commercial banks, which also remained lower than the same period last year.”
The industrial sector is presenting a mixed picture. “Higher cement dispatches, steel imports and strong PSDP spending suggest a pick-up in construction activity in 1QFY15,” said the report.
“In contrast, LSM (large-scale manufacturing) growth showed a decline, as local manufacturers faced gas shortages (especially in fertiliser, textile, paper, glass and leather sectors).
Furthermore, textiles also remained dull on account of lower demand for yarn and fabric from China and Bangladesh. The fall-out of a weak commodity-producing sector can also be seen in wholesale and retail trade activity. However, the vibrancy in finance and insurance, and telecommunications, appears to have provided services a boost this year.
While discussing the outlook on the economy, the report maintains that the external sector would benefit the most from the decline in oil prices, as petroleum directly makes up nearly 35% of the import bill. Inflation is also likely to end up much lower than initial expectations, as the government has steadily been reducing retail petroleum product prices in line with international rates.
Riaz Haq said…
From IHS Jane's 360:

Chinese foreign minister Wang Yi reiterated calls for the implementation of the China-Pakistan Economic Corridor (CPEC) to be expedited during his two-day visit to Pakistan on 12 February.

As part of China's wider plans to increase connectivity in Asia, the CPEC is planned to connect Gwadar port in Pakistan's Balochistan province to Kashgar in China's western Xinjiang province through road infrastructure, railways, and oil and gas pipelines. In November 2014, the Chinese government committed to investing USD45.6 billion until 2020 for the various projects included under the CPEC, of which USD15 billion will be spent on renewable energy projects to alleviate Pakistan's energy shortages.

However, the CPEC's route has been the subject of intense domestic debate in Pakistan over the past month, resulting in two walk-outs from parliament. The Khyber Pakhtunkhwa and Balochistan provincial governments have accused the Pakistan Muslim League - Nawaz (PML-N) federal government, which draws its support primarily from Punjab, of altering the CPEC's road transportation route away from the two comparatively underdeveloped provinces. The PML-N government on the other hand argues that it plans to use the existing road network in Punjab and Sindh on an interim basis while the route through Khyber Pakhtunkhwa and Balochistan is developed, which could take as many four years according to current government estimates.

While the intensity of debate indicates the CPEC's likely initiation, the possibility of losing the broader development that it represents underpins the risk of protests and riots in Khyber Pakhtunkhwa and Balochistan in at least the three-month outlook. Already in Quetta, Balochistan's provincial capital, traders went on general strike backed by local political parties on 13 February. Protests are likely to remain relatively peaceful and cause less than 24 hours of disruption, unless a major political party intensifies its opposition. The most likely is Imran Khan's Pakistan Tehreek-e-Insaf (PTI), which heads the Khyber Pakhtunkhwa government. The party has already launched two major protest movements, including a four-month anti-government sit-in that ended in December 2014 as well as a cargo blockade in Khyber Pakhtunkhwa from November 2013 to February 2014.
Riaz Haq said…
Billionaire Mian Muhammad Mansha’s D.G. Khan Cement Ltd., Pakistan’s third-largest maker of the construction material, plans to build an $300 million plant near Karachi as economic growth boosts demand.
“There will be a shortage domestically in three years if there is 10 percent growth in demand each year,” Chief Financial Officer Inayat Ullah Niazi said in an interview at the company’s headquarters in Lahore on Thursday. The company’s two cement plants have operated near full capacity in the past two years.
The company is building its first plant since 2007 to tap economic growth that Prime Minister Nawaz Sharif’s government forecasts will be the fastest in seven years, even as the nation grapples with an electricity supply crisis and terrorism. Pakistan’s output is projected to expand 4.3 percent in the year ending June 30 and 4.75 percent in the following fiscal year by the International Monetary Fund.
The new plant near Hub, a city west of Karachi, will produce about 2 to 2.5 million tons of cement a year, Niazi said. Construction is targeted for completion late in 2018. The plant will be financed 40 percent through internal cash and the rest through debt, Niazi said.
“Expansion means the company will enter the southern region of the country,” Tahir Abbas, an analyst at brokerage Arif Habib Ltd. said by phone in Karachi. “This will impact the entire industry and could start a price war.”
Earnings Forecast
D.G Khan shares rose 2.9 percent to 128.63 rupees in Karachi Thursday. The stock has gained 48 percent over the last year, compared with a 32 percent gain in the benchmark KSE100 Index.
Cement sales in Pakistan rose to a record 34.3 million tons in the year ended June 30, 2014, according to the cement manufacturers’ association. Sales are on track for another record this year.
D.G. Khan is spending $30 million to generate electricity from coal to run its plant in Punjab province to decrease reliance on natural gas. South Asia’s second-biggest economy is struggling to meet gas demand and plans to import liquified natural gas.
The company forecasts net income will rise 25 percent to rise to 7.5 billion rupees ($74 million) in the year ending June 30, Niazi said. Domestic sales with higher margins than exports will contribute to the projected gain. Net income was a record 5.99 billion rupees in the last fiscal year.
Riaz Haq said…
The federal cabinet of Pakistan, during a meeting Monday, approved the Pakistan-China economic corridor, a media report said. Approval was also given along for starting negotiations with Beijing for importing 1,000 megawatts of electricity from China by laying a new transmission line, Dawn online reported. The Pakistan-China Economic Corridor (PCEC) is the country's biggest road project launched by the government. Work on one of the sections of the PCEC was initiated in December 2014, under which a motorway from Havelian to Thakot as phase one of the Islamabad-Raikot section of the corridor would be constructed. The Havalian to Thakot section of the corridor is being financed by China while other phases will be carried out on the basis of build, operate and Transfer (BOT).
Riaz Haq said…
From Wall Street Journal: Pakistan’s Economic Management Gets Thumbs Up From IMF

Pakistan’s economy has improved, thanks to prudent monetary and fiscal policies, strong capital inflows, robust remittances from abroad and lower oil prices, the International Monetary Fund said on Wednesday.

“The authorities have made progress with consolidating macroeconomic stability, strengthening public finances and rebuilding foreign-exchange buffers,” Masood Ahmed, director of the IMF’s Middle East and Central Asia department, said in a statement following a recent visit to Islamabad and Lahore.

As a result, economic growth is strengthening and inflation is slowing, he added.

Pakistan’s central bank slashed its key interest rate in January by a full percentage point, to 8.5%, citing a slowdown in inflation, among other factors, amid plummeting oil prices and declining global prices for other commodities. January’s interest-rate cut came after a half-percentage point easing in November.

Mr. Ahmed called on Pakistan’s government to further bolster revenue by broadening the tax base and improving compliance, which would allow it to further reduce public debt while increasing spending in key areas such as health and education.

The Pakistani government should also “reinforce and build on recent stability gains to work towards achieving higher, sustainable and inclusive economic growth.”

Priorities for the government should include addressing longstanding imbalances in the energy sector, restructuring and privatizing public-sector enterprises, proceeding with investment-climate and trade reforms as well as continuing with financial-sector reforms, the IMF official noted.
Riaz Haq said…
Pakistan cut its benchmark interest rate to the lowest in almost 13 years as a decline in global oil prices helped slow inflation in a nation wracked by political protests and terrorism.

State Bank of Pakistan Governor Ashraf Mahmood Wathra reduced the discount rate for a third straight month to 8 percent from 8.5 percent, the central bank said on its website on Saturday. Nine of 11 economists in a Bloomberg survey predicted the reduction, two estimated the rate being cut to 7.5 percent.

The lowest borrowing cost since December 2002 will help Prime Minister Nawaz Sharif encourage companies to expand in the nation that’s recovering from the worst fuel shortage in recent memory and a school massacre that killed 152 people most of them children. Consumer prices last month rose at the slowest pace since Bloomberg started compiling data in 2009.
“The decision will help improve consumer confidence and we will see private sector borrowing rising,” Yawar-uz-Zaman, vice president at Shajar Capital Pvt. in Karachi said by phone. “We forecast another 50 to 100 basis point reduction as inflation slows.”

When Sharif took power in May 2013, he faced a balance-of-payments crisis that forced him to seek help from the International Monetary Fund. Foreign exchange reserves have doubled in the past year to $16 billion, the budget deficit has narrowed and inflation eased to 3.24 percent in February.
Pakistan’s benchmark stock index has risen more than 60 percent in the period. The IMF forecasts Pakistan’s economy to expand 4.3 percent this year, compared with the five-year average of 3.6 percent.
Political Protests
“Owing to recent foreign exchange inflows and lower oil prices, external sector outflows continue to improve,” the central bank said in the statement. “The trend moderation in inflation is broad-based with food and non-food inflations receding.”
Political protests last year to oust Sharif threatened to disrupt an economic overhaul. The slaughter of 134 students in December underscored the ongoing risk from Taliban militants, part of an insurgency that has killed more than 50,000 people since 2001.
Sharif canceled a trip to the World Economic Forum in Davos in January as fuel shortages left motorists stranded across the country. Shortly afterward, a terrorist attack triggered a blackout that left 80 percent of the country without power.
Riaz Haq said…
Moody’s Raises #Pakistan Outlook as Economy Improves Under #PMLN #NawazSharif via Kyrgyzstan Business Information​
Pakistan’s credit rating outlook was raised to positive from stable by Moody’s Investors Service, signaling an upgrade is possible for the first time since 2006 as the economy steadily improves.
The new outlook “is based on a strengthening external liquidity position, continued efforts toward fiscal consolidation, and the government’s steady progress in achieving structural reforms under the IMF program,” Moody’s analyst Anushka Shah said in a statement on Thursday.
The company maintained its non-investment-grade Caa1 foreign currency rating and said implementation of more reforms, successful completion of the International Monetary Fund program or better finances could trigger an upgrade.
Prime Minister Nawaz Sharif is using lower oil prices, higher remittances and more consumer spending to push growth toward a seven-year high. Even so, a large budget deficit, high debt costs and dependence on external funding leaves Pakistan vulnerable to political and economic risks, Moody’s said.
When Sharif took power in May 2013, he won a $6.6 billion loan from the IMF to avert a balance-of-payments crisis. Since then, the country has cleared six program reviews and has also regained eligibility to borrow from the International Bank for Reconstruction and Development.
“Fundamentals of the country are improving,” Hedi Ben Mlouka, chief executive officer at hedge fund Duet Mena Ltd., said in a March 18 phone interview from Dubai. Even a “marginal improvement will make a very big difference and make it an attractive investor destination.”
The benchmark KSE100 stock index has rallied 56 percent since Sharif took office, and the rupee has outperformed every major global currency over the past six months.
Foreign exchange reserves have doubled in the past year to $16 billion and the IMF forecasts Pakistan’s economy to expand 4.3 percent this year, compared with the five-year average of 3.6 percent.
The nation’s central bank last week cut its benchmark interest rate to the lowest in almost 13 years as lower oil prices slowed inflation.
Riaz Haq said…
Ambassador of Pakistan to Afghanistan Syed Abrar Hussain on Monday said that Pakistan had planned to construct a motorway from Peshawar to Kabul and a feasibility study about the project would soon be commissioned.

Ambassador expressed these views after hoisting National flag on the occasion of National Day at the Pakistan embassy in Kabul. He said that the motorway project will not only improve connectivity between the two neighbours and Central Asian States but would also bring economic prosperity to Afghanistan, said a press release.

He also underscored the need for intensifying bilateral cooperation between the two countries in the areas of trade, economy, culture and defence. He said that Pakistan attached utmost significance to its ties with the brotherly country and would like to see a strong, stable, peaceful and prosperous Afghanistan.

Talking to efforts to enhance trade with Afghanistan, the ambassador said that Pakistan had removed several trade impediments so as to facilitate and encourage bilateral trade. He stated that Pakistan had executed various projects in health, education and infrastructure sectors in Afghanistan which would tremendously benefit the Afghan people.

Pakistan day was celebrated in the Embassy of Pakistan, Kabul, with great enthusiasm and national fervor to commemorate the passage of historical Lahore Resolution on March 23, 1940 which played a vital role in determing the destination of the Muslims of sub-continent. The Pakistan Day ceremony started with national anthem and hoisting of flag by the Ambassador.

Addressing the participants, he highlighted the historical significance of the day and paid tributes to the founding fathers who had rendered immense sacrifices for achieving a separate homeland. He said that the Pakistan's Resolution of 23rd March 1940 laid the foundation stone of an independent country.

He also paid homage, in his address, to the Father of Nation, Quaid-e-Azam Muhammad Ali Jinnah, whose relentless struggle led to the creation of Pakistan on August 14, 1947. The ceremony was attended by members of Pakistani community including educationists, engineers, doctors, senior executives and businessmen.
Riaz Haq said…
Last year, the world produced 3.6 billion tons of cement—the mineral mixture that solidifies into concrete when added to water, sand and other materials—and that amount could increase by a billion tons by 2050. Globally, the only substance people use more of than concrete, in total volume, is water.

Cement’s virtues, Vlasopoulos says, have long been plain: It is inexpensive, pourable and, somewhat inexplicably, becomes hard as a rock. But one other important detail is seldom acknowledged: Cement is dirty. Not dirty as in it won’t come off your clothes—although that problem has dogged construction workers for centuries. The key ingredient is limestone, mostly calcium carbonate, the remains of shelled marine creatures. The recipe for making cement calls for heating the limestone, which requires fossil fuels. And when heated, limestone sends carbon dioxide gas wafting into the atmosphere, where it traps heat, contributing to global warming. Cement production is responsible for 5 percent of the world’s human-produced carbon dioxide emissions; in the United States, only fossil fuel consumption (for transportation, electricity, chemical manufacturing and other uses) and the iron and steel industry release more of the greenhouse gas. And with booming countries such as China and India using cement to construct their rise, cement’s dirtiness looms as one of the foremost downsides of globalization.
People have been trying to build a better cement since just about the beginning of history. More than 2,000 years ago, the Romans devised a mixture of lime, volcanic ash and chunks of stone to form concrete, which was used to make harbors, monuments and buildings—the glue of early cities—including the Pantheon and the Colosseum. In the 1820s, in Leeds, England, about 200 miles from Imperial College, a stone mason named Joseph Aspdin invented modern cement. Aspdin heated a concoction of finely ground limestone and clay in his kitchen. After he added water, the mixture hardened. Voilà—the building block of the Industrial Revolution was born. Because the material looked like a popular building stone from the Isle of Portland, Aspdin called his invention Portland cement. The patent, issued in 1824, was for “an improvement in the mode of producing an artificial stone.”

The Australian developers had tried a new recipe, mixing Portland cement with magnesium oxide. They hoped to reduce carbon emissions because magnesium oxide can take the place of some of the limestone, and magnesium oxide does not have to be heated at such a high temperature. Limestone must be heated to 2,600 degrees Fahrenheit, but magnesium oxide can be prepared for cement at 1,300 degrees, a temperature that can be attained with biomass and other fuels that release less carbon, cutting down on fossil fuel consumption.

But Vlasopoulos quickly discovered that the blend did not reduce overall carbon dioxide emissions. In some tests, the emissions nearly doubled, because magnesium oxide itself is produced by heating magnesium carbonates, a process that releases carbon dioxide.

“I remember feeling very disappointed because when you see that the project you’re working on is not actually what you thought it was going to be, you lose motivation,” he said. “But we felt it was a very worthwhile project, a worthwhile idea, so we tried to find another way to solve the problem.”

At the time Vlasopoulos took up the question, in 2004, big cement firms around the world were looking for new ways to make Portland cement more environmentally palatable. The producers added steel byproducts, such as slag; coal residues, such as fly ash; and other materials, such as magnesium oxide, to bulk up the cement mixture, requiring less Portland cement. They experimented with mineral additives to reduce the temperatures needed to prepare the materials.

Read more:
Riaz Haq said…
Pakistan’s consumption up 8%, but exports fall
While Pakistan’s cement industry recorded strong domestic growth of 8.07 per cent in cement consumption during May, there was also a steep decline in exports and the sector is not performing to full capacity.

The decline in exports during May was 26.13 per cent which led to an overall decline of 0.39 per cent in the cement despatches compared with May 2014.

A spokesman of the All Pakistan Cement Manufacturers Association (APCMA) said the cement industry was still operating below capacity despite almost 7.98 per cent growth in the domestic consumption during the first 11 months of this fiscal. He said overall decline in exports in the first 11 months of 2014-15 was 10.82 per cent that restricted the total growth in the industry to only 3.47 per cent.

Pakistan’s cement industry despatched 25.492Mt of cement for domestic market during July-May period of this fiscal against 23.608Mt despatched during the corresponding period last year, according to the APCMA.

The government has moved to protect the cement industry with its federal budget that has some direct and indirect incentives for the domestic cement industry for next FY15-16 (July – June), which will increase demands for cement in country.

Finance Minister Ishaq Dar said the duty on cement imports as "preemptive action" to promote the local industry and avoid cement dumping. The minster has proposed enhancement of duty on import of cement, rationalisation of tax structure for construction industry/ housing development, a significant rise of 27 per cent in Public Sector Development Programme (PSDP) allocation, a five-year tax holiday for establishing new manufacturing facility in northern province and reduction in corporate tax by one per cent are positive steps for industry.

However, the government also proposes increase in duty on import of coal. According to finance bill, coal attracts one per cent customs duty. Since all other fuels attract higher duty rates, it is proposed that customs duty on Coal be increased from one to five per cent. The industry will comfortably pass on PKR2.0/bag (US$0.019) -PKR3.5/bag (US$0.034) to end consumers.
Riaz Haq said…
#Pakistan real estate Boom: #Karachi and #Islamabad markets record gains …

When prices of real estate stagnated in 2014, all eyes were focused on the next year with hopes that it would bring along some momentum in the market. Truly, the much-needed activity emerged, though in part, in the first half of this year.

In almost all popular localities in Karachi and Islamabad, property prices went up over the six-month period from January to June 2015, showed data released by, a property portal of the country.

Lahore, however, continued to record sluggish activity with prices remaining static this year as well. But this is not a worrying sign. The property market of Lahore often slows down when investors pay more attention to real estate developments in the country’s capital as well as in Karachi.

In an encouraging development, several new projects are on the cards in Lahore, including the 60,000-kanal LDA City and the 40,000-kanal DHA Phase IX. These and other projects are widening the scope of investment opportunities in the city, which will help steady the property market in the long run.

In the first half of 2015, one of the top localities in the city, Lahore Cantt, registered a decline of 9.29% in prices while real estate markets in DHA Lahore, Bahria Town and LDA Avenue-I remained stable.

Average price for a one-kanal plot went down only 1.02% in DHA Lahore in the first half whereas in Bahria Town the same plot cost 3.26% more over the same period.

Similar stability was noted in LDA Avenue-I, where average price for a one-kanal plot edged up a negligible 1.05%.

Though Johar Town continued to offer one of the highest rental yields at 4.26%, DHA Lahore and Lahore Cantt remained the more expensive neighbourhoods. On average, a one-kanal house in the localities cost Rs36 million and Rs37.5 million respectively.

Here, three of the four popular localities recorded decent gains in the first half, with Bahria Town the only top locality posting a slight drop in property prices. In comparison to the miserable second half of 2014, this was a good turnaround for the real estate market in the capital.

A moderate growth was noticed in Sector F-11 and DHA Islamabad as prices of one-kanal plots rose 6.05% and 6.96% respectively. There was also a modest growth of 6.39% in plot prices in Sector E-11.

Bahria Town, however, remained stable with a slight dip of 1.20% in one-kanal plot prices in the first half of the current calendar year.

Sector F-11 was one of the most expensive areas for buying one-kanal houses in Islamabad with an average price of Rs68.2 million. It was closely followed by Sector E-11 where average prices were Rs62.9 million for a one-kanal home.

However, Bahria Town, despite a slight dip in average prices, offered a high rental yield at 4.35%.

With investor focus squarely on Karachi for several months now, the city’s top localities have seen decent rises in prices as well as hectic activity in the first half despite Ramazan and a deadly heatwave.

Gulshan-e-Iqbal and DHA City Karachi recorded handsome price increases whereas DHA Karachi and Bahria Town also posted healthy gains to play their part in a very encouraging overall performance.

Prices of a 500-square-yard plot in DHA Karachi showed a restricted – by Karachi standards – growth of 6.09% while Bahria Town posted a healthy rise of 9.85%.

Prices went up 12.36% in Gulshan-e-Iqbal and 12.23% in DHA City Karachi, indicating a satisfactory and controlled growth.

DHA Karachi was one of the costliest neighbourhoods for buying homes with average sale price of Rs58.9 million for a 500-square-yard house.

Though Gulshan-e-Iqbal offered a relatively higher rental yield at 5.01%, average house prices stood at Rs37.4 million in the locality, well short of the prices prevailing in DHA Karachi.
Riaz Haq said…
Pakistan’s Lucky Cement Ltd. is close to winning a permit to extract limestone in Punjab province, signaling expansion plans by the nation’s largest maker of the building material by market value.
The company will get a limestone quarry for a cement plant in Punjab, and the local administration has approved the deal, said Arshad Mehmood, secretary for Punjab’s mines and minerals department. An agreement is expected to be signed in the next few days, he said.
The Karachi-based cement maker is set to join producers including Attock Cement Pakistan Ltd. and D.G. Khan Cement Ltd. that have announced expansion plans as Prime Minister Nawaz Sharif looks to boost infrastructure spending.
“Everything is positive for construction,” Bilal Khan analyst at Karachi-based Global Securities Pakistan Ltd., said by phone. “If growth stays at the same pace, the person who decides to expand today is the winner.”
Sharif is seeking to accelerate growth in the $247 billion economy to the fastest pace since 2008 with the spending, while China and Pakistan have announced a 3,000-kilometer, $46 billion economic corridor, which includes roads, ports, power plants and dams.
Lucky Cement’s shares have advanced about 50 percent in the past year, outperforming the 21 percent gain in the benchmark KSE100 Index. Shares fell 1 percent to 523 rupees as of 10:21 a.m. local time. They rose to a record last month.
The company operates two plants at 85 percent of capacity in Pakistan. It also has a cement grinding facility in Iraq and is part of a venture that will build a cement plant in the Democratic Republic of Congo.
Riaz Haq said…
Improved Security Situation Drives Property Boom in #Karachi #Pakistan. 22% jump in prices #KarachiOperation

Anyone who bought property during the bloody carnage in Pakistan’s biggest city over the past few years is now cashing in.
Property prices are growing faster in Karachi than in any other major Pakistani city this year as the streets become safer following a security blitz that began in September 2013. Police have counted 68 murder-free days from August 2014 until early December, and the average number of daily killings has dropped to four from about seven.

“Karachi’s market, especially, has us on the edge of our seats,” said Zeeshan Ali Khan, chief executive officer of, which claims to run Pakistan’s largest property website. Sales have “grazed peak after peak” following the security operation, he said.
The safer streets reflect efforts by Pakistani authorities to clamp down on terrorism and organized crime that has deterred investment. More commerce in one of the world’s fastest-growing megacities will also help the national economy: Karachi generates about half of Pakistan’s tax revenue and is home to the country’s stock exchange and central bank.
“Now people have hope things will get better, and Karachi is the place they should be investing,” Arif Habib, chairman of Karachi-based conglomerate Arif Habib group, said in a Dec. 7 interview. “One year ago people were concerned to invest in their businesses in such a situation, or even expand.”
22 Percent Jump
Average property prices in Karachi increased 22 percent to 7,234 rupees ($70) per square foot in October compared with a year earlier, according to By contrast, real estate prices rose 14 percent in Lahore and fell 5.5 percent in Islamabad, the capital.
A reduction in extortion is helping to drive demand in middle-class neighborhoods of Karachi, according to Faraz Arif, head of research and marketing at Arif Habib Dolmen REIT Management Ltd. Previously, some potential buyers would have to pay about 20 percent of the purchase price to gangs in cash, he said.

“For them the difference is significant," Arif said in an interview. “Now those people are more confident.”
Pakistan’s economy is forecast to expand 5.5 percent, the most in nine years, as Prime Minister Nawaz Sharif and a more assertive army chief take steps to tackle power shortages and Islamic militancy that have held back growth. His government is also seeking to narrow the fiscal deficit and sell stakes in state-run companies to meet conditions on a $6.6 billion International Monetary Fund loan.
Army Chief
Better security in Karachi is key to Pakistan’s long-term growth prospects. The city once served as the base for Khalid Sheikh Mohammed, the self-proclaimed mastermind of the Sept. 11, 2001, attacks in New York. Wall Street Journal reporter Daniel Pearl was murdered here in 2002. More than 13,000 people were killed in Karachi since January 2011 -- almost double the number of U.S. military personnel that died in the Iraq and Afghan wars.
While Nawaz Sharif’s government authorized the police in Karachi and paramilitary forces to clean up the city, much of the credit for the improved security has gone to army chief Raheel Sharif, no relation to the prime minister.

Since Taliban militants killed more than 130 students at a military school last December, the military has stepped up a campaign to flush them out of areas along the Afghan border. In Karachi, authorities have also gone after criminal gangs and political parties in a bid to stop turf wars that fomented the violence.
Muttahida Qaumi Movement, Karachi’s biggest political party known as MQM, has accused security forces of targeting its members instead of militant groups like the Taliban and Islamic State.
Outlook Mixed
“The operation should be focused on them," said Aminul Haq, an MQM spokesman. He added that his party was the first to support the crackdown and fully respects the army, paramilitary forces and police.
Riaz Haq said…
#Pakistan #cement sales surge 15.6 percent in July 2015 to Jan 2016. #CPEC #Economy via @sharethis

The data showed that local cement sales surged 15.57 percent to 17.9 million tons in July-Jan 2015/16. However, cement exports slid 24.98 percent to 3.4 million tons.

Cement manufacturers expressed dismay over the indifference shown by the economic planners towards rapidly declining exports.

“Substantial reduction in exports has drastically affected foreign exchange earnings of the country and cement makers are finding it difficult to maintain their existence in the export markets due to high cost of doing business in Pakistan and non-availability of incentives,” said APCMA spokesman.

In July-Jan 2015/16, factories located in north dispatched 14.776 million tons in local markets as against 12.948 million tons in July-Jan 2014/15.

The south-based factories registered a 23 percent growth in domestic sales in the period under review as their local sales stood at 3.12 million tons as against 2.53 million tons earlier.

The north-based mills registered a 22.35 percent decline of exports to 2.16 million tons in the first seven months of this fiscal year. South-based cement manufacturers recorded 29.17 percent exports fall to 1.243 million tons.

The industry dispatched 3.085 million tons of cement in January compared with 2.898 million tons dispatched in the same month a year ago, showing a growth of 6.47 percent.

Again this was mainly attributed to healthy domestic sales. In January, the local sales were 2.699 million tons as against 2.419 million tons earlier, up 11.54 percent.

In January, exports dropped to 386,562 tons from 478,000 tons in the same month a year ago, showing a decline of 19.19 percent.

The APCMA spokesman said despite several reminders on significant issues, which have been eroding export volumes, apparently no interest has been shown by the government to address them.

“Government must take immediate steps to stop smuggling of Iranian cement into the country,” he added.

He further said the government should also give due attention to reduce energy costs by removal of gas infrastructure development cess, reduction of custom duty on coal to zero percent and announcing additional incentive of five percent on cement export by sea in order to reduce the overall cost of operations to make the Pakistani cement industry competitive globally.

- See more at:
Riaz Haq said…
#UAE expats drive up house prices in #Pakistan as #Dubai real estate values fall 15-20% …

According to a Dubai ann­ual market update issued in mid-December, ave­rage residential property prices have fallen 16 per cent and 14 per cent year on year for apartments and villas, respectively, while overall unit transactions declined by 33 per cent.

A soft Dubai property market is encouraging Pakistan expatriates in the UAE to invest back home. This, in turn, is pushing up property prices in Pakistan, resulting in values almost doubling in some areas.

Higher demand, especially in Karachi and Islamabad, was driving prices higher on a daily basis, according to property brokers and developers quoted in a report that appeared on In contrast, residential prices in Dubai have fallen by up to 15 to 20 per cent in recent months.

According to a Dubai ann­ual market update issued in mid-December, ave­rage residential property prices have fallen 16 per cent and 14 per cent year on year for apartments and villas, respectively, while overall unit transactions declined by 33 per cent.

"Ample liquidity for property investment is pushing prices up everywhere, particularly in Karachi and Islama­bad," said Ashraf Hameed, the director of property developer Value Housing.

He cited closer monitoring of the cross-border movement of money and improved law and order situation as reasons behind the uptrend. "We have no problem of law and order in Islamabad while the situation in Karachi has also improved significantly," he added.

M. Anwar, a private investor in Karachi, said: "Property prices in Dubai have dropped 15 to 20 per cent in commercial and semi-commercial areas, and five to 10 per cent in posh areas."

Pakistanis have been among the leading investors in the Dubai property sector. Most of them were businessmen, politicians, government officials and those who migrated to other countries and shifted their property to Dubai for better returns.
Riaz Haq said…
#UK company to invest $400 million to build #cement plant in #Pakistan. #CPEC #economy

UK company, Asian Precious Minerals (APML), is to build a new cement plant in Pakistan, according to local news reports, with an investment of US$400 million.

The plant is to be built in the province of Khyber Pakhtunkwha in the northwestern region of Pakistan. The investment was announced at a meeting between APML officials, the Chief Minister of Khyber Pakhtunkwha, Pervez Khattak, and officials from the British High Commission.

“We are delighted to be investing in a new cement plant in Khyber Pakhtunkwha,” said Nadim Khan, CEO of APML. “We look forward to constructing a model, state-of-the-art and environmentally friendly cement plant.

Khan also praised the provincial government for improving the security situation in Khyber Pakhtunkwha, which borders Pakistan’s tribal region and Afghanistan, as well as its “pro-business stance and good governance policy”.

“This British investment will help create local jobs and stimulate the local economy,” said Chief Minister Khattak. “I am glad to see that the UK recognises the dramatic improvements in the province and I look forward to welcoming more British companies in future.”

Pakistan’s cement sector is currently booming with utilisation rates at cement plants reaching over 90%, according to the All Pakistan Cement Manufacturers Association. In the six months to the end of 2016, cement shipments in the country grew to 19.896 million t on the back of local demand growth of 11.07%.

“Pakistan growth is being driven by the Economic Corridor with China (CPEC),” according to cement industry analysts, IA Cement.

“The CPEC allocates US$11 billion to infrastructure projects and US$35 billion towards new power projects and has already led to a strong double-digit growth in cement demand in 2016.In 2017, many projects will either reach completion or be in the full construction phase [and] we therefore expect another year of strong growth with cement demand rising 8 – 10%.”
Riaz Haq said…
#China building boom to churn out #Pakistan's largest steel IPO with #steel output growing 23% in 2016. … via @markets

Agha Steel Industries Ltd. is planning Pakistan’s biggest-ever private sector initial share sale this year to help boost output as China funds more than $55 billion in infrastructure projects across the nation and a buoyant stock market spurs investor demand.

The Karachi-based company plans to raise as much as 10 billion rupees ($95 million) selling a 25 percent stake, Executive Director Hussain Agha said in an interview. The sale will be the largest since the 12-billion rupees government stake sale of Habib Bank Ltd. in 2007, the country’s largest IPO yet.

Steel and cement makers in Pakistan are expanding to meet demand as the “One Belt, One Road” trade route financed by China spurs construction. The nation’s economy has grown at about 5 percent annually since 2013, encouraging Agha’s peers including International Steels Ltd. and Aisha Steel Mills Ltd. to lift production.

“You need roads, sky rises and housing,” said Agha. “Pakistan’s steel industry is in an infancy stage and growing at a massive pace -- the whole environment will change.”

Read more: Chinese Largesse Lures Countries to Its Belt and Road Initiative

The company will use the funds for $50 million expansion that will triple output to 500,000 metric tons within two years. Production will then double to a million tons by 2023, he said. Habib Bank has been appointed financial adviser while Arif Habib Ltd. and BMA Capital Ltd. were picked as book runners for transaction.

Pakistan’s steel output grew 23 percent to 3.6 million tons in 2016, the biggest gain among 40 nations, according to the World Steel Association. Agha Steel expects construction-grade steel, such as rebars and wire rods, to grow as much as 12 percent annually for the next three years.

The construction sector expanded 13 percent in year ended June 2016, more than twice the pace in the previous 12 months, according to State Bank of Pakistan’s annual report. Rapid urbanization and rising income levels has left the nation with an annual shortfall of 500,000 homes, according to real-estate developer Arif Habib.

“Real-estate is the main engine for this growth, it has really picked up,” said Ayub Khuhro, chief investment officer of Karachi-based Faysal Asset Management Ltd., which has about 8 billion rupees in stocks and bonds. “The government is also willing to protect companies with anti-dumping measures.”

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