Karachi: It is expected that the Domestic demand of cement will rise by 6% in FY12 on account of the high spending in the PSDP. The appropriate weather is another reason for the expected rise.
The post budgetary measures, retention for cement manufacturers has increased by an average 7% MoM in the month of July to Rs5,300/ton. Although a decline in Mom in the month of July is expected in the industry’s dispatch as the monsoon season is starting. The industry reports propose a slight improvement on a YoY basis. This increase is mainly due to the manufacturers not fully passing on the reduction in FED of Rs200/ton, removal of 2.5% SED and cut in GST of 1ppt.
On the other hand the domestic dispatches are expected to decline due to the start of the monsoon season by 5-7%MoM (vs. a decline of 16%MoM last year). The industry reports are suggesting a slight improvement of 6-8% on a YoY basis.
This improvement is expected due to the purchases delayed until July 1st in response to fear of fall in prices and low chances of rough weather this year. Another reason is the reconstruction activities undertaken in the areas hit by flood.
The coal prioces have swindled down as well, thus assuaging fears of costs. Coal prices at the start of the year had peaked up at FOB US$130/ton in Jan 2011. but now have fallen to US$115/ton.
