Pakistan Per Capita Cement Consumption Hit New High of 170 Kg in 2016

Pakistan's domestic cement consumption reached 35 million tons in 2016, up from 30 million tons in 2015, according to a report published by Global Cement.  Using the latest census population of 207 million, it works out to about 170 Kg per person consumption. The increase is driven by a combination of CPEC-related infrastructure projects as well as commercial and housing construction.

Pakistan Cement Sales. Source: Global Cement

While domestic demand for cement is continuing its upward trend, the exports have suffered a major decline. In 2009, the exports hit a high of over 11 million tons, constituting 34% of all cement dispatches at the time. Since then, they have fallen to below 6 million tons or 14% of all sales.

Pakistan cement industry is booming. There is some disagreement about where the biggest demand is coming from.  The CEO of Thatta Cement says it is 60% infrastructure and 40% housing but others say it is 70% housing and 30% infrastructure.

Pakistan's 11 cement manufacturers are investing a combined $2.25 billion to add new production capacity of 30 million tons a year by 2019, according to a media report attributed to the State Bank of Pakistan.

The year 2017 is also proving to be yet another boom year for cement industry. Cement sales have soared by 15% year-on-year to 10.3 million tons in the first quarter of fiscal year 2017-18 that ended in September 2017, up from 9 million tons in the same period in 2016.

Pakistan is among the world’s fastest-growing construction markets. A BMI report published earlier in 2017 forecasts an average 12 percent growth annually for the next five years.  Cement capacity utilization increased to 88 percent in the 10 months through April, the highest in 11 years, according to Bloomberg.

Beyond the construction industry boom, Pakistan's large scale manufacturing (LSM) sector is also soaring by double digits. Both of these sectors are important drivers for job growth in the country.

Although production was driven mostly by strong domestic demand, the exports in July-Sept 2018 also increased nearly 11% over the same period last year.

Among the notable sub-sectors driving strong LSM growth in July-August 2017 are: Tractors 115%,  motorcycles 28.3%, deep freezers 16.2%, air-conditioners 26.8%, electric-fans 22.4%, electric motors 17.3% and electric meters 18.3%, and switchgear 20.8%.

Significant improvement in the country's security situation is helping restore confidence of investors, businesses and consumers who are pushing economic growth in Pakistan to new highs. The fast pace of execution of China-Pakistan Economic Corridor (CPEC) related projects is at least partly responsible for it.

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Riaz Haq said…
Pakistan's bustling economic activity tries to recover from ruins of terrorism

GDP is forecast to grow by 6 percent this year from 5.28 percent in the 2016-2017 financial year.

Pakistan is expected to become the world’s 20th largest economy by 2030 and the 16th largest by 2050 based on results of previous years. It is also expected to be the world’s fastest-growing Islamic economy in 2017. This is no small feat considering that it was engulfed in turmoil a few years ago. Six years ago Al-Qaeda leader Osama Bin Laden was killed by the US navy seals during a bloody shoot out that shocked the world in a compound in Abbottabad, as the war on terrorism continued.

The government says the phenomenon has cost the the country $68 billion in direct and indirect impact between 2000 and 2010. The army is always on the street - a reminder of the precarious situation that Pakistan still finds itself in.

Even the 750 delegates from 85 different countries who attended the Emerging Pakistan initiative had to be under full time police escort. Snipers on top of buildings are a common site in the country. But the country wants to reclaim its national image and narrative and present it for what it truly is: positive and full of potential.

Pakistan is building a brand that communicates the opportunities to a diverse audience that includes investors both international and local. Organisers says the attendance was double the size from last year.
Riaz Haq said…
Pak economy performs robustly in 1Q, with fiscal deficit at 1.2 percent

With the fiscal deficit recorded at 1.2 percent of the gross domestic product (GDP), the federal government's financial operations and debt statistics for the first quarter of the current fiscal year (1QFY17) show strong performance and prudent expenditure.

On one hand, the revenue collection — especially that from taxes — registered a strong growth of over 20 percent during 1QFY17, while, on the other, the government's domestic and external borrowings were kept under check, a finance ministry spokesperson said in a statement here Tuesday.

The spokesperson stated that there were expenditure controls as well, which reflected on the prudent fiscal management and government's resolve to maintain this momentum in the remaining quarters of the year.

Based on the actual data, the overall fiscal deficit during 1QFY17 was recorded at 1.2 percent of the GDP as opposed to 1.3 percent during the last year's corresponding period, the spokesperson added.

He said the total consolidated federal and provincial revenue amounted to Rs. 1.025 trillion, which reflects an 18.9-percent increase over same period last year.

The tax collection by Federal Board of Revenue (FBR) amounted to Rs. 765 billion — denoting a hefty growth of over 20 percent — while the non-tax receipts for the period amounted to Rs. 114 billion, which are also higher when compared to the same period, last year.

The total expenditure during the period amounted to Rs. 1.466 trillion, of which the current and development expenditures were Rs. 1.241 trillion and Rs 0.221 trillion, respectively.

The statistical discrepancy for the period July-September 2017 amounted to Rs. 4 billion compared to Rs. 38 billion during last year's same period.

The spokesperson said the civil accounts data of the federal government's revenue receipts and expenditure in 1QFY17 was received from the office of Accountant General Pakistan Revenues (AGPR), financing data from Economic Affairs Division (EAD) — external financing — and from the State Bank of Pakistan (SBP).

Likewise, the civil accounts data of the provincial government's revenue receipts and expenditure in 1QFY17 was received from the provincial Accountant General (AGs).

He added that the deficit figure reported earlier was based on the SBP's daily cash balance reports, which did not include the financing on account of project aid and financing from National Savings Schemes.

The financing from project aid was substantially higher on account of roads and infrastructure, he said.

The spokesperson said around 47 percent of the budget estimates were received as project aid financing during July-September 2017 on that account.

This has mainly been received during September 2017, while incremental receipts on account of National Savings Schemes have recently been reported by the SBP, he added.

The federal government deposits with the SBP, he stated, also reduced during September 2017.

Therefore, after including the aforementioned financing data, the overall fiscal deficit for the July-September 2017 period amounted to 1.2 percent of the GDP against 1.5-1.8 percent of GDP projected by some analysts.

The spokesperson said a section of the media had drawn some premature conclusions on debt performance of the government based on the data for the first two months of the current fiscal year. He clarified that choosing to evaluate debt statistics based on two-month numbers was a flawed method that led to misrepresentation.

He said as debt numbers from relevant agencies — such as Economic Affairs Division, Budget Wing, National Saving and State Bank — were received and consolidated for 1QFY17, it had become quite clear that the upwards bump in public debt was well below the analysts' forecasts.
Riaz Haq said…
SBP sees private credit off-take to boom in Q4

“The seasonal pattern along with robust growth in large scale manufacturing index observed during Jul-Sep 2017 suggests that advances to private sector will rise in Q4CY17,” the central bank said in the quarterly performance review of the banking sector on Tuesday.

“Less than normal seasonal fall in advances along with improved liquidity and strong solvency – well above the minimum benchmark – are the key highlights of the 3rd quarter of CY17.” Though gross advances to private sector decreased Rs5.4 billion in July-September 2017, they were significantly lower than the contraction of Rs112.2 billion during the same period of last year.

“Banking sector’s asset base has expanded marginally during third quarter, though, on year-on-year basis, the growth has been quite robust (16 percent),” the central bank said. “Encouragingly, share of fixed investment (long-term) loans in total loans continues to rise indicating improved business confidence.”

The central bank said low interest rates help credit flow into the real economy. “However, the banking sector’s review showed that corporate borrowing was a little bit disappointing during the third quarter.”

It further added that advance-to-deposit ratio inched down 48.3 percent in July-September 2017 from 48.7 percent in the previous quarter. The central bank suggested banks to boost their ability to maximise benefits from pickup in economic activity driven by China-Pakistan Economic Corridor.

“In order to deliver better performance, banks need to calibrate the changing macroeconomic environment in their business models to capitalise the emerging opportunities as arising from, generally, growth in the economy and, particularly, from the China Pakistan Economic Corridor (CPEC),” it said.

The SBP said the risks to the resilience of the banking sector are likely to remain muted in the last quarter of 2017 as capital adequacy ratio is expected to remain well above the minimum regulatory requirement despite narrowing return margins and anticipated rise in risk weighted assets.

Banks posted profit of Rs111.7 billion in the third quarter, as compared to Rs89.9 billion in a quarter ago. The central bank said earnings of the banking sector have moderated due to low interest rates and increased administrative expenses, in addition to one-off settlement payment made by a large bank.

Banking sector remains sound & stable in Q3CY17: SBP

Advances demand from textile and other sectors (agriculture, automobiles, electronics etc.) have been promising. Noticeably, the share of fixed investment (long-term) advances in overall advances is persistently rising.

Banks have continued to invest in short term MTBs while investment in PIBs and Sukuk have declined. The deposit mobilization has remained on track, primarily, on the back of growth in saving and fixed deposits.

Asset quality has improved as Non Performing Loans (NPLs) to gross advances (infection) ratio has moved down to 9.2 percent as of end September 2017 from 9.3 percent as of end June 2017.

However, profitability has moderated further with the banking sector earning profit (before tax) of PKR 195.3 billion during Jan-Sep, 2017 (ROA of 1.6 percent and ROE of 19.1 percent).

Encouragingly, Net Interest Income (NII) has improved (Year-on-Year basis) on account of rising interest earned on advances. Capital Adequacy Ratio of the banking sector at 15.4 percent is well above the minimum required level of 10.65 percent and advocates that banks have enough buffers available to meet additional financing need of the market.
Riaz Haq said…
Pakistan sales drive continues in second half of 2017
Written by Global Cement staff
08 January 2018

Pakistan: Cement sales rose by 12% year-on-year to 22.2Mt in the last six months of 2017 from 19.8Mt in the same period in 2016. Data from the All Pakistan Cement Manufacturers' Association (APCMA) shows that domestic consumption rose by 17.4 % to 19.8Mt from 16.9Mt, according to the Express Tribune newspaper. However, exports continued to decline in the period by 17.3% to 2.9Mt from 2.4Mt. Exports fell in most parts of the country, particularly in the south, despite increases from plants in Punjab and Khyber-Pakhtunkhwa. The APCMA has blamed this on high industry costs, foreign imports and local legislation.
Riaz Haq said…
DG Khan Cement announces completion of Pakistan’s biggest $300mln plant

KARACHI: DG Khan Cement on Wednesday announced the start of the country’s biggest cement plant with around 9,000 tons/day capacity at an estimated cost of over $300 million as construction sector is booming in the market seeing a double-digit growth in the commodity’s demand.

“DG Khan Cement has completed the installation of Pakistan’s largest cement plant at Hub, Balochistan,” the cement maker said in a statement to the Pakistan Stock Exchange. “The largest vertical cement grinding mill with cope drive has started trial operations together with cement silos and packaging plant. Also, successful commissioning has been completed in raw material crushing, transportation and storage departments.”

The new plant has a capacity to produce 8,500 to 9,000 tons/day and was expected to employ 1,000 workers.

DG Khan Cement is the third biggest cement producers in the country with a production capacity of 14,000 tons/day. The cement market has now four cement plants: two located in Dera Ghazi Khan, one in Chakwal and new one in Hub.

“The cement produced in the trial run is being dispatched to customers,” the company said. “Announcement of commercial production will be made in due course of time.”

The company has been setting up the plant using European technology for the past one decade, and is estimated to cost Rs35 to Rs40 billion. The cement maker had signed an agreement with K-Electric for 40 megawatts of electricity needed for the plant.

Cement sales increased 15.1 percent to 38.996 million tons during the first 10 months of the current fiscal year of 2017/18 due to infrastructure uplifts and recovery in exports.

Local cement consumption and exports stood at 33.880 million tons in the corresponding period a year earlier, according to All Pakistan Cement Manufacturers Association’s data.

Contribution of south-based mills in aggregate sales and exports stands at around 18 percent as they sold 6.087 million tons in the local markets and exported 1.236 million tons in the July-April period.

Pakistan’s 24 cement plants have capacity of producing 47 million tons of clinker and 49 million tons of cement a year.

Local cement industry is massively investing in capacity enhancement in view of China-Pakistan Economic Corridor projects, which are estimated to cost more than $57 billion.

They planned to increase production capacity by 26 to 28 million tons to 72 million tons plus within the next two to three years.
Riaz Haq said…
Cement sales likely to post 8-year high growth of 14 percent in FY2018

Local cement sales stood at 40.8 million tons in the last fiscal year, while its exports marginally rose 0.9 percent to 4.7 million tons, bringing the total cement dispatches 12.9 percent up to 45.5 million tons.

“Growth in local and export dispatches fared better… thanks to higher infrastructure demand from CPEC- (China-Pakistan Economic Corridor) related projects, real estate construction activities across Pakistan and increase in exports from Lucky Cement and Attock Cement new cement lines that came online in 2HFY18,” analyst Nabeel Khursheed at Topline Securities said in a report.

“Moreover, due to expected increase in competition in south region owing to upcoming capacities, players are tapping into new export markets that also supported export growth.”

Khursheed said construction sector reported nine percent growth in FY2018, which was in line with the last 5-year average growth rates.

“This was on the back of economic recovery and booming real estate sector. Credit to construction sector as of May 2018 stood at Rs156 billion, up 21 percent,” he added. “After being in the doldrums in 1HFY18 (witnessing average 16 percent year-on-year decline), exports recovered in the second half, recording stellar average growth of 37 percent thanks to higher exports from Lucky and Attock Cement’s new cement lines in the South region as well rupee devaluation.”

There are 24 cement manufacturers operating in the country with Lucky Cement Limited having the biggest production capacity of nearly five million tons. Bestway Cement, Maple Leaf Cement, Attock Cement Pakistan, Kohat Cement Company are also the major producers with two to four million tons of operational capacity.

Industry utilisation stood at 95 percent in FY2018 as compared to 87 percent in FY2017, 85 percent in FY2016, 78 percent in FY2015 and 75 percent in FY2014.

“The utilisation this year will be a 2.5 decade high. The highest utilisation of 92.7 percent was recorded in FY1996,” Khursheed said.

The analyst said pricing remained a big concern for the industry despite outstanding domestic consumption during the year. Cement industry shed 42 percent during the last fiscal year due to rising input cost and increase in production capacities.

“Producers’ ability to pass on any hike in input cost (higher coal prices and rising transportation cost due to increase in international oil prices) going forward will depend on growth in local demand,” he added.

Cement prices in northern region averaged Rs529/bag in FY2018 versus Rs534/bag in FY2017. Cement prices in the northern region started to decline as low as Rs496/bag on an average after August last year. But, prices posted a recovery after March when cement makers passed higher coal cost and impact of federal excise duty on to consumers. Khursheed said free-on-board ‘Richards Bay’ coal prices increased 20 percent to $93.6/ton in FY2018. It is currently hovering at around $104.25/ton.

“If coal prices remained at this level, manufacturers may find it difficult to pass on the cost owing to upcoming cement capacities.”

In June, cement sales are likely to fall 30 percent month-on-month and rise three percent year-on-year to 2.5 million tons due mainly to Ramazan and Eid holidays. Cement exports, however, are expected to decrease 10 percent month-on-month and increase 10 percent year-on-year.
Riaz Haq said…
#FDI in #Pakistan's #cement and #construction industries sees 53% growth in FY18. cement industry attracted FDI of US$59m and the construction industry US$707.30m compared to US$36m and US$465.90m, respectively in July 2016-June 2017.

Pakistan's cement and construction industry received foreign direct investment (FDI) of US$766.3m during the 12 months of FY17-18 (July -June), compared to US$501.9m received in corresponding months of last fiscal year. This translates a YoY growth of 53 per cent, says the State Bank of Pakistan (SBP).

The breakdown shows that cement industry attracted FDI of US$59m and the construction industry US$707.30m compared to US$36m and US$465.90m, respectively in July 2016-June 2017.

According to SBP, the cement industry makes a direct contribution of 7.5 per cent to large-scale manufacturing. Moreover, the cement manufacturers will expand their production capacities aggressively, from 49.4Mta to 72.8Mta in the next few years, and the additional capacity would result in the imports of machinery of around US$1.5bn (near PKR178bn) over next few years, says SBP.

In the cement industry, the cost of machinery imports comes around 70 per cent of total cost of the unit/project. This means, the overall estimated cost of expansion would be around PKR254bn (US$2bn).
Riaz Haq said…
#Pakistan #automobile sales up by 21% in July-June 2017-18. Total car sales have gone up by 21 per cent in the last fiscal year with 216,786 units sold as compared to 185,781 units in the last fiscal year. #Manufacturing #economy via @profitpk

In June 2018, auto sales were up 20 per cent YoY to 15,662 units whereas it was down 15 per cent month-on-month (MoM) due to the Eid holidays during June.

In a comment to Pakistan Today, Pak Kuwait Investment Company AVP Research, Adnan Sheikh said that “Auto sales have been increasing mainly due to a low-interest rate environment and the advent of ride-sharing apps, along with the introduction of new models like Civic BRV, Fortuner and The Wagon-R which have all performed well. But major growth in numbers comes from below 1000cc cars, mainly the Wagon-R for the price-conscious buyer and ride sharing captains. Mehran and Wagon-R together added around 20,000 additional unit sales. So you can see most buyers are in the price conscious category, whereas Honda’s sales grew because of two new models – new Honda Civic and BRV. While Toyota shifted production from the Corolla to the high-profit margin Fortuner and Hilux, volumes for the Fortuner more than tripled. Going forward, we may witness a slowdown in growth / potential dip in sales if car prices keep rising due to a rupee depreciation and higher international commodity prices, along with a sharp rise in interest rates and a spike in fuel prices; and the market will become extremely competitive when new players start producing with cost advantages under ADP incentives over the next two years”.

For the Fiscal Year ended 2018, Pakistan auto sales (including LCVs Vans and Jeeps) rose by 21 per cent year-on-year (YoY) with growth seen in all segments. “The strong performance was due to a multitude of reasons ranging from supportive macroeconomic environment, cheaper financing, demand from ride-hailing services, as well as demand generated from election activity,’ said an analyst at Topline securities. This slowdown in car sales is due to higher car prices as the company raised car prices for the third time during this fiscal year, continuous Pak-rupee depreciation against the dollar, he added. The major reason of declining car sales is the restriction imposed by the government on non-filers for booking and registration of new cars, and resumption of import of used and new cars through personal transfer or baggage scheme, the analyst said.
Riaz Haq said…
#Pakistan #cement sector's FY19 starts strongly. Pakistan's cement industry earned foreign exchange revenue of US$20.96m by #exporting 475,134 tons of cement last month compared to US$16.31m on 369,506 tons of cement

Pakistan cement industry's FY19 started positively in terms of exports with rises in the first month July 2018. According to the Federal Bureau of Statistics, Pakistan's cement industry earned foreign exchange revenue of US$20.96m by exporting 475,134t of cement last month compared to US$16.31m on 369,506t of cement. This reporesented growth of 28.56 per cent and 28.59 per cent in terms of value and quantity respectively on MoM basis.

In local currency terms growth of 34.38 per cent was seen to PKR2.60bn (US$21.2m). However, compared with July 2017 earnings of US$22.96m on 428,489t of cement it translates to a fall of 6.91 per cent in earning of foreign currency. Quantity rose by 10.89 per cent YoY.

Riaz Haq said…
MBF Group agrees to build $970 million medical city in #Islamabad, #Pakistan. - will include a world-class 400-bed #university #hospital . Once completed it is projected to serve 1 million patients and clients on a monthly basis.

Sheikh Mohammed bin Faisal Al Qassimi says his flagship development company MBF Group has reached an agreement with Ibchez Housing and Nixon to build an integrated medical city in Islamabad. Total investment for the project is expected to total $970 million.

Located within the 100,000sqm Gulberg Greens development, the project will include the construction of a 400-bed university hospital which will be capable of delivering international and advanced standards of care in the Pakistani capital. Once completed it is projected to serve 1 million patients and clients on a monthly basis.

The founder and owner of the UAE-based developer added that the medical city will also comprise Pakistan’s first medical mall as well as therapeutic and recreational areas, a regional cardiology centre, and an orthopaedic centre.

The Gulberg Greens Medical City will also be the location of a new nursing college.

MBF Group is working with Nixon for the first time, and its a partner will represent the group in Pakistan, said Al Qassimi. As well as the develoment, the group will manage the city’s 1,000 medical, technical and administrative Pakistani staff and is responsible for providing medical equipment and beds.

In a statement published on WAM, Al Qassimi was quoted as saying there is a growing demand for advanced medical services in Islamabad and provide specialist health services that are in short supply.
Riaz Haq said…
#Pakistan 2016 Per Capita #Steel Consumption: 42 Kg, #India 72.3 Kg, #Bangladesh 25.7 Kg, #China 504.9 Kg, #Japan 528.4 Kg, #UAE 918.5 Kg, #USA 318.4 Kg, #Germany 522.5 Kg, #Sudan 9.0 Kg
Riaz Haq said…
A review of 9MFY19 performance of Pakistan’s cement industry

IGI Securities has reviewed the performance of Pakistan's cement industry for the first nine months of FY18-19 (July 2018-March 2019). Provisional numbers show that cement dispatches for March 2019 declined by 12 per cent YoY to 4.11Mt. On a cumulative basis, this brings 9MFY18-19 total dispatches to 34.19Mt as against 34.76Mt, recorded in the same period last year, marking a fall of two per cent YoY.

While local sales from southern Pakistan have grown by over 15 per cent during the nine-month period as a result of excess capacity and deeper penetration, those from the north of the country have dropped by 12 per cent YoY largely, due to curtailed government spending on development projects and reduced private construction activities amid weak macroeconomic indicators.

While export sales have been on the rising trend ever since 4QFY18, amid rising capacities in the south, clinker exports account for a major share. Contrary to cement exports which achieve better prices of US$50-55/t in the international market, clinker is sold at relatively-lower and less-profitable prices of US$32-35/t.

Cement exports from the north, particularly in the last two months, have been on the decline, mainly due to the deteriorating trade terms with India amid rising political tensions between the two countries.

Cement prices
As of 28 March 2019, average cement prices in the northern region stood at PKR596/bag (US$4.23), down by one per cent MoM, according to weekly data published by the Pakistan Bureau of Statistics (PBS). Average cement sale prices in the south have marginally edged up by 0.6 per cent to PKR613/bag.

Pakistan’s cement sector in FY18-19 is ending with a decline with little improvement expected in FY2019-20. Following the seven per cent YoY contraction of local dispatches in 9MFY18-19 and with the holy month of Ramadan around the corner during which construction activities are substantially reduced, analysts expect FY18-19 to end with a below-par performance when compared with the previous year.
Riaz Haq said…
#Pakistan #cement sales go up by 2.56pc in first quarter of FY 2019-20. In September, total dispatches increased by 11.51 percent to 4.270 million tons. Domestic sales increased to 9.116m tons from 9.063m tons while #exports grew by 12.54pc to 2.017m tons

Pakistan’s total cement dispatches during first quarter of the fiscal year went up by 2.56 percent to 11.133 million tons. Out of total sales, local dispatches increased to 9.116m tons from 9.063m tons while exports grew by 12.54pc to 2.017m tons from 1.792m in the last fiscal year. In September, total dispatches increased by 11.51 percent to 4.270 million tons compared to the corresponding period last year. During the month, domestic consumption reached 3.472m tons from 3.114 million tons during the same month last year. Exports rose to 0.798 million tons last month as compared to 0.715 million tons in September 2018. Local consumption in the northern region during the month under review swelled by 22.4pc to 3.027m tons from 2.47 million tons in September 2018. The southern region witnessed 30.48pc drop in dispatches to 0.446m tons from 0.64 million tons in September 2018. Industry experts said the lopsided consumption pattern has benefited plants located in the northern region while those operating in the south have entered the red zone in view of over 32 percent drop in uptake during the first quarter of this fiscal year. They said the country has the potential to produce about 60 million tons of cement per year. Recently, a cement company has closed its old plant, which had production capacity of 3,150 tons per day. The government has given tax benefits on the introduction of new technology in cement plants. At present, the interest rate in Pakistan is so high that no one is considering starting a new business.

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