Pakistan’s cement industry is witnessing a notable shift as domestic sales finally recover after three years of contraction, while exports continue to decline. Local cement dispatches increased by 14 percent during the first half of FY26, driven by renewed public sector development activity and improving confidence in the private sector. However, export volumes fell by 5 percent, limiting overall growth and keeping production well below optimal levels.
Despite rising local sales, industry wide capacity utilisation remains at around 54 percent, significantly below the 60 percent benchmark that supports stable pricing and healthy margins. Cement plants are therefore operating at barely half capacity, highlighting the persistent challenge of excess supply created during the previous expansion cycle.
The revival in domestic demand is a positive structural development for the industry. Public sector development spending has begun to stabilise, offering a more predictable source of consumption. In addition, a markup subsidy for first time home buyers is gradually stimulating genuine demand in the housing and construction sectors, providing a firmer base for future growth.
Even so, domestic volumes are still below historical highs. Average monthly local sales currently stand at around 3.5 million tonnes, nearly half a million tonnes short of the peak recorded in FY21. This indicates that while demand is improving, the recovery remains incomplete.
Exports, which previously acted as a key absorber of surplus supply, are losing momentum. Their share in total dispatches has fallen to 18 percent from more than one fifth last year. Political disruptions along the Afghan border have constrained cross border trade, particularly affecting northern producers that traditionally relied on regional export markets.
Looking ahead, cement demand is expected to grow by 8 to 10 percent over the next year, supported by higher development spending and housing incentives. Industry consolidation is also accelerating as leading producers acquire smaller players to protect margins and pricing power. While underutilisation may continue to pressure profitability in the short term, disciplined pricing and consolidation could help shield the industry from extreme boom and bust cycles.
