Cement industry resilient amidst challenges, focuses on exports

The cement industry in fiscal year 2024 has faced a series of challenges, including stalled projects, funding cuts, delayed approvals, and a struggling economy. These difficulties have persisted throughout the year, with domestic cement offtake experiencing a significant decline. Despite some positive signs such as a 2.5 percent increase in total cement offtake driven by a 65 percent growth in exports, the industry dispatched around 31 million tons of cement, marking a 4 percent decrease compared to the previous year.

In April 2024, domestic offtake hit a low point of 2.3 million tons, the lowest since July 2022. This downward trend is worrisome, especially when considering the average monthly domestic offtake in fiscal year 2024, which stands at 3.17 million tons. This figure is only higher than the offtake in fiscal year 2017 and significantly lower than the demand seen in fiscal years 2018, 2021, and 2022.

Despite efforts to expand capacities in anticipation of rising demand, the industry is grappling with unabsorbed capacities, with a capacity utilization rate of only 54 percent in the first 10 months of fiscal year 2024. This contrasts sharply with the robust 87 percent capacity utilization rate in fiscal year 2017, despite lower monthly average domestic sales.

Exports have been a crucial lifeline for the industry, constituting 21 percent of sales in April 2024, the highest in over three years. While the total exports contribution has been somewhat inconsistent, averaging at 15 percent during the 10-month period, it represents an improvement from the previous year's 9 percent. The industry's reliance on exports underscores the importance of maintaining momentum in this area to overcome challenges.

Despite the uncertainties in demand, most cement companies have managed to sustain strong financial performance, benefiting from factors such as lower coal prices, favorable pricing conditions, and investments in energy efficiency projects. The industry's resilience in navigating through economic fluctuations highlights its ability to withstand challenges and adapt to changing market conditions.

The cement industry in fiscal year 2024 has faced obstacles but has shown resilience in the face of adversity. With a focus on leveraging exports, optimizing capacities, and capitalizing on favorable market conditions, the industry continues to weather the storm. As it looks towards the future, maintaining a balance between domestic and export markets will be crucial for sustained growth and stability in the industry.