Cement dispatches rise to 50.58 million tons on stronger construction demand

ISLAMABAD: Pakistan’s cement dispatches climbed to 50.58 million tons in FY26, posting an increase of about 8% from a year earlier as construction activity recovered and lower policy rates supported demand, according to market reports cited by brokerage firms.

Usama Rauf of AKD Securities said the improvement was mainly driven by the domestic market, where sales rose 9% year-on-year to 41.5 million tons as construction activity revived and average policy rates eased.

"“The improvement was led by domestic demand, where sales grew 9% YoY to 41.5 million tons amid the recovery in construction activity and lower average policy rates,”"

According to an AKD Securities report, local dispatches jumped 27% year-on-year to 3.54 million tons in June, while cumulative domestic sales for FY26 reached 41.57 million tons, up 10%.

In June 2026 alone, total cement sales increased 18.4% from the same month last year to 4.33 million tons. Arif Habib Limited said the rise was supported by a low base from Eid holidays in the corresponding period of the previous year.

"“driven by a low base effect from Eid holidays in the same period of the previous year,”"

Regional trend and capacity use

Northern region dispatches rose 16% to 3.01 million tons in June, while southern region volumes increased 23% to 1.31 million tons.

AKD Securities said industry-wide capacity utilisation reached 59% in FY26, compared with 56% in FY25, reflecting stronger domestic offtake. In the North, utilisation increased to 53% from 49% a year earlier, largely due to higher local demand. In the South, utilisation climbed to 84% from 79%, supported by a 9% rise in sea-based exports.

Budget measures and housing finance

The FY27 federal budget is expected to further support the sector through higher Public Sector Development Programme spending, relief on property taxes and the expansion of the Prime Minister’s Apna Ghar housing scheme.

A key development cited was the government’s approval to include Non-Banking Finance Companies in the programme following a proposal by the Securities and Exchange Commission of Pakistan. Under the arrangement, housing and investment finance companies can provide loans of up to Rs10 million, while microfinance companies can extend up to Rs5 million.

The loans carry a subsidised 5% mark-up for the first 10 years within a maximum tenure of 20 years, with government backing for mark-up subsidy and risk coverage. The measure is aimed at middle and lower-income groups, with the report saying NBFCs have wider outreach through more flexible financing. The removal of Section 7E and other property-related incentives could help boost home ownership and cement consumption.

Company performance and outlook

Among individual producers, Lucky Cement recorded a 31% year-on-year increase in total dispatches in June to 0.91 million tons, helped by a 40% rise in local sales. For FY26, the company posted sales of 9.668 million tons, up 4%.

Fauji Cement’s June dispatches rose 11% to 0.48 million tons, while DG Khan Cement’s volumes increased 12% to 0.39 million tons. Kohinoor Cement and Pioneer Cement also posted double-digit growth. Power Cement registered a 60% year-on-year rise in June dispatches to 0.28 million tons, while Maple Leaf Cement’s June volumes were marginally lower but still showed 5% growth for the full year.

Both AKD and Arif Habib Limited maintained a positive view on the sector. AHL said momentum could strengthen further with improving economic activity, FY27 budget support for construction and a possible recovery in export demand. AKD projected local cement offtake to grow by around 8% in FY27, supported by lower financing costs, easing construction costs after the de-escalation of tensions in the Middle East and a favourable fiscal policy. Lower coal prices following the US-Iran ceasefire could improve margins, but cautioned that renewed conflict and higher oil and coal prices remained a risk to demand and profitability.

"“a re-ignition of the conflict and a renewed spike in oil and coal prices remain key risks to our demand and margin outlook.”"

The sector is being supported by recovering demand, stable margins and deleveraging, while cement prices have gradually improved in both the northern and southern markets.