December 05, 2006	Tuesday	Ziqa'ad 13, 1427

KARACHI, Dec 4: Cement sales for the month of November, 2006 stood at two million tons, which was the highest-ever sales, recorded in any single month. Sales for November showed growth of 68 per cent over 1.19 million tons of cement despatches in the corresponding month of the previous year.

Figures released by All Pakistan Cement Manufacturers Association (APCMA)) on Monday put the total sales for five months of the current financial year (July-Nov 2006) at 9.05m tons, which was 26 per cent higher than sales of 7.23 million tons in the corresponding five months of last year.

They said that the higher despatches reflected a pick up in housing construction activity and a spur in exports. Exports for November of the current year stood at 1.70 million tons, which was 75.4pc more than 0.97m tons in the same month last year and represented 46.6pc growth over the five months year-on-year to 9.54 million tons, from 6.51m tons.

Cement analyst Khurram Shahzad at InvestCap said: "Exports had picked up pace mainly to Afghanistan, where reconstruction work had gathered pace, besides exports to growing markets in Dubai, the Middle East and Lebanon." He reasoned that manufacturers had pushed larger number of bags overseas, because of rising demand and better prices in the export markets.

Local sales registered growth of 68 per cent to 1.84 million tons for November this year and 23.25 per cent increase in despatches to 8.10 million tons for five months, compared to sales at 1.10 million tons for November and 6.58 million tons in five months last year.

Analyst Khurram observed that as economy grows so will the demand for cement. He said that the industry would have to stabilise prices so as to protect mainly the smaller producers. He thought that the larger manufacturers could survive due to their economies of scale, but it would be difficult for smaller units to maintain their profitability. Eventually, the smaller cement mills may have no option but to merge with larger units just as happened in the banking sector.

Cement sales for all of the previous year ended June 30, 2005 was 21 million tons and most analysts visualized demand to grow at 15 to 18 per cent, which presented brighter picture for the industry, provided there was stability in local prices, increase in demand and the start of some of the mega projects that the government has in mind.

For the current fiscal, government has allocated a record Rs435 billion in the budget for the development of infrastructure. The government has also reiterated several times its decision to go ahead with the construction of big dams for storage of water and generation of electricity.

The reconstruction work in vast region that was devastated by earthquake of October last year has yet to begin in right earnest. But analysts said that until the manufacturers were able to reach a 'bench-mark price' and the 'distribution of local markets' industry- wise, exports would be the major driver of earnings growth.