The fiscal year 2025 (FY25) saw a modest growth in Pakistan’s cement industry, with total cement dispatches increasing by 2 percent year-on-year (YoY) to 46.22 million tons. This growth was primarily driven by a significant rise in exports, even as domestic consumption faced a decline.
Domestic vs. Export Dynamics
During FY25, the domestic cement consumption decreased by 3.1 percent, totaling 37.02 million tons. Various factors, including economic challenges and fluctuations in construction activities, contributed to the dip in local demand. In contrast, the export sector experienced substantial growth, with dispatches increasing by 29.5 percent to 9.20 million tons. This surge in exports underscores the growing demand for Pakistani cement in international markets, offering a silver lining amidst domestic market challenges.
Region-wise Performance
North-based Mills
In the northern region, cement mills experienced a 1.8 percent YoY decrease in dispatches, totaling 32.41 million tons. Domestic sales in this region fell by 2.6 percent YoY, reflecting a decline in local demand. However, exports from the North-based mills rose by 15.6 percent YoY, highlighting their ability to tap into foreign markets to offset domestic challenges.
South-based Mills
Conversely, South-based mills reported significant growth, with a 12.3 percent increase in total dispatches to 13.81 million tons. This growth was primarily driven by an impressive 33 percent rise in exports, which compensated for a 5.2 percent decline in local demand. The performance of South-based mills underscores the importance of export markets in driving growth for the cement industry, particularly in regions where domestic demand is lagging.
Monthly Performance: June Analysis
In June, the cement industry faced a slight setback, with dispatches declining by 2.8 percent YoY to 3.46 million tons. This decline was mainly due to a substantial 15.7 percent drop in local sales, which fell to 2.60 million tons. The decrease in domestic sales during this month could be attributed to seasonal factors, economic conditions, or a slowdown in construction activities.
Despite the decline in local sales, exports saw a remarkable surge of 81.7 percent, reaching 0.86 million tons. This significant increase in exports highlights the industry’s resilience and ability to leverage international opportunities even when faced with domestic market challenges.
Factors Influencing Cement Industry Trends
Several factors have played a role in shaping the trends observed in the cement industry during FY25. The decline in domestic consumption can be attributed to economic challenges, fluctuating construction activities, and possibly increased costs of production and distribution. Additionally, the impact of government policies and infrastructure spending may have influenced local demand patterns.
On the export front, the industry’s growth can be linked to the competitive pricing of Pakistani cement, favorable exchange rates, and increased demand from neighboring countries and international markets. The strategic focus on exports has enabled the industry to cushion the impact of declining domestic sales, showcasing its adaptability and global competitiveness.
Looking Ahead
As the cement industry reflects on the performance of FY25, several key takeaways emerge. The reliance on export markets has proven to be a crucial strategy for growth, especially in regions where domestic demand is struggling. The industry’s ability to adapt to changing market dynamics and leverage international opportunities will continue to be pivotal in shaping its future trajectory.
For continued growth, the industry may need to explore ways to stimulate domestic demand, possibly through innovative products, cost-effective solutions, or strategic partnerships. Additionally, addressing the factors contributing to the decline in local sales will be essential in achieving a balanced growth model that leverages both domestic and international markets.
The performance of the cement industry in FY25 serves as a testament to its resilience and potential for growth, even amidst challenging circumstances. By focusing on export opportunities and addressing domestic market challenges, the industry is well-positioned to navigate future uncertainties and capitalize on emerging opportunities.
