INSIGHT

January06,2014

Cementdispatches
(kMT)

Dec'13 Nov'13 MoM 1HFY14 1HFY13 YoY

AccordingtoDec13cementsalesnumbersreleasedbyAPCMA,localcementofftake Local 2,315 2,130 9% 11,976 11,728 2.1%

clocked in at 2.3mn tons, posting a growth of 9% MoM while export sales numbers Exports 625 601 4% 4,143 4,223 1.9%
grew by 4% MoM, taking the total sales to 2.9mn tons (up 8% MoM). We believe, Total 2,940 2,731 8% 16,119 15,951 1.1%
growthintotaldispatchesisprimarilyledbyhigherMoMlocalsalesduetolowbase
Cementsales12MFY13(MT)
effectofpreviousmonth(religiousholidays)andprebuyingduetopricehikeantici
Monthlysalestrend (MT)
pation. Moreover, the Govt. is not releasing PSDP funds according to the stated
Exports
Local
scheduleandcementdemandislikelytopickupfrombothpublicandprivatesector 3.5
postFeb14oncePSDPspendingincreases.Yearlycomparisonsaremorereasonable 3.0
to understand the magnitude of the variation in dispatches trend. During 1HFY14, 2.5
domestic dispatches stood at 11.98mn tons, growing by 2% YoY while export sales 2.0
figures showcased a decline of 2% YoY, taking total cement dispatches to 16.1mn 1.5
1.0
tons,upmarginallyby1%YoY.
0.5

Dec13

Oct13

Nov13

Sep13

Jul13

Aug13

Jun13

Apr13

May13

Mar13

Jan14

Sep13

May13

Jan13

Sep12

May12

Jan12

Sep11

125
100
75

RichardsBay

Newcastle

HassaanBinGhafoor
hassaan.ghafoor@taurus.com.pk
Direct:+922135216403

DISCLAIMER:Theaboveinformationandadviceisgiveningoodfaith,withoutanylegalresponsibility.TaurusSecuritiesLimitedorindividualscon
nectedwithitmayhaveusedresearchmaterialbeforepublicationandmayhavepositionsinormaybeinterestedinthesecuritiesmentionedherein.

Jan14

Sep13

May13

Jan13

50
Sep12

AccordingtoprovisionalsalesnumbersforDec,onthelocalfront,allofthecementplayersinour
TSLcementuniversedepictedanimpressiveMoMvolumetricimprovement,withbiggestriseof
34%beingwitnessedinLUCK.However,exportsalescontinuedtobeacauseofconcernwhere,
apart from MLCF which is showing a rise of 18% MoM, other players displayed a decline, with
DGKCbeingworsthit(down39%MoM).Onatotalsalesbasis,cementdispatchesremainedim
pressivefortheindustrywithbiggestimprovementonanoverallbasisbeingwitnessedinMLCF&
FCCL.

150

May12

TSLUniverseperformance

Richard's Bayvs.Newcastlecoal prices

(USD/ton)

Jan12

AveragecementpriceacrossthecountryiscurrentlyhoveringaroundPKR515/bag,representinga
substantialhikeofPKR52/bagsineJun13.WebelievemuchofthisreflectsariseinGSTandinfla
tionary cost pressurewhile power cost impact is yet tobe fully passed on. As per our sources, a
furtherincreaseof~PKR2025/bagisexpectedoncedemandspicksupthatwilltakeFY14endce
mentpriceto~PKR540/bag.Aftercontinuouslyraisingthecementprices,inordertominimizethe
gapbetweenNorthandSouthregion,Southerncementplayershavetakenthepriceto~PKR530/
bag(Sukkuar,Larkana&Hyderabad)whichwillimprovemarginsofSouthernplayers,goingfor
ward.

Jan11

TSLResearch

Averagecementpriceslikelytoreach~540/bagbyFY14end

Sep11

Afterhoveringaround~USD71/toninSep13,coalpricesbrieflysoaredto~USD90/toninlateOct
13,buthavenowstabilizedat~USD83/ton.Thissubduedpricingscenarioisexpectedtocontinue
intheshortrunwhileFYTDaveragecoalpricestandsatUSD78/ton.

540
510
480
450
420
390
360
330

Jan11

CoalpriceslikelytoremainrangeboundinFY14

Jan13

Cementprices(PKR/50 kgbag)

Exportswillremainerraticdespitemomentaryturnaround
AfterpostingacontinuousdeclineduringOctNov13,cementexportofftaketookaturnaround
andregisteredadecentgrowthof4%MoMto0.625mntons.Althoughwedonothavetheexact
breakup of export sales, but as per our analysis, the augmented export volumes is due to turn
aroundindemandfromAfghanistandespitepricecompetitionfromIraniancement.

Feb13

Dec12

May11

Average cement prices are hovering around PKR515/bag, representing a substantial

hikeofPKR52/bagsineJun13.WebelievethatmuchofthisreflectsariseinGSTand
inflationarycostpressureswhilepowercostimpactisyettobefullypassedon.Asper
oursources,afurtherincreaseof~PKR2025/bagisexpected,oncedemandpicksup
whichwilltakeFY14averagecementpriceto~PKR540/bag.

May11

Construction&Materials

ImprovedMoMperformance,butthebestisyettocome