Pakistan Cement Players Begin Talks to Resolve Market Share Disputes

Staff Report:

Pakistan Cement Players are reportedly under disagreements. A few listed players have asked for an increase in market share, while some have requested changes in geographic sales to fetch higher retention prices. Our channel checks suggest that these issues have been ongoing for 2-3 months. Finally, cement sector players have started negotiations to resolve the issues, which we believe will result in an amicable solution.Law Minister aassures CCP ssupport in tackling case backlog, cartel enforcement

As a result of these issues, cement prices in the month of December 2024 in the north region have decreased by 5% over the last two months, falling from Rs1,490 per bag in October 2024 to Rs1,415 per bag as of January 2, 2025, according to PBS data. Further, as per our dealer checks, cement prices in the north have dropped further to Rs1,370 per bag.

Consequently, KSE-100 listed cement companies have declined by 2.73-6.93% during the first half of today’s trading session.

A meeting of cement players held yesterday (January 2, 2025) ended without any resolution, and another meeting will be scheduled to finalize the issues.

Channel checks suggest that the start of negotiations among cement manufacturers is a positive sign, and a resolution is expected on the matters discussed.

As of the first five months of FY25, data reveals that the sales-based share in the north for DGKC, KOHC, and BWCL has remained almost stable compared to FY24. However, the sales-based share of MLCF, PIOC, and CHCC has declined. We await further details from the resolution to clearly assess the impact, such as which companies may have to forgo market share and which companies may benefit.

Based on our channel checks, the likely outcome of these negotiations would involve a resolution on adjusting sales-based shares according to capacity and restoring prices to previous levels.

Additionally, there is an issue of KP-based plants selling cement at lower prices in Punjab due to a raw material cost disparity between Punjab and KPK plants, stemming from higher royalty on raw material in Punjab. This issue is also likely to be resolved.

We maintain an ‘Overweight’ stance on cement with MLCF and LUCK as top picks, based on the expected rebound in cement sales in FY26 and beyond,” Topline said.