Traditionally July is a weak month for cement demand due to the monsoon season, however, the decrease has been slightly magnified this July because of heavy rainfall and floods at the tail end of the month, said JS Global Capital analyst Syed Atif Zafar.
Export sales were down 15 per cent to 775,000 tons in July against the previous month. They were also down 31 per cent compared with July 2009.
Absence of inland freight subsidy triggered the slowdown in exports whereas the fall on yearly basis can be attributed to less attractive prices during this period, said Zafar.
Hence, total dispatches were down 16 per cent on monthly basis at 2.5 million tons. Sales are expected to remain disappointing in August as well on the back of the recent floods and the month of Ramazan, said Zafar. Construction activity tends to slow down in Ramazan.
However, demand is expected to pick up in 2011 after reconstruction activities in the flood-affected areas begin, said Zafar.
The floods have severely affected the road and distribution networks. This will also have a negative impact on local cement sales, according to Topline Securities analyst Furqan Punjani.
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