Pakistan’s cement industry is showing clear signs of revival, this time led by domestic demand, as exports retreat and weigh on overall growth momentum.

Last year, exports played a pivotal role, contributing more than 20 percent to total sales as local demand remained subdued. That dynamic is now reversing. Domestic markets are regaining strength, while exports have taken a back seat due to external disruptions rather than any strategic pullback.

According to data released by the All Pakistan Cement Manufacturers Association, total cement offtake during the first half of the current fiscal year reached 25.8 million tonnes, marking a 10 percent year-on-year increase.

Cumulative domestic demand rose 14 percent, with average monthly domestic dispatches climbing to around 3.5 million tonnes, compared to 3.1 million tonnes in the same period last year. The increase is significant as it reflects a steadier consumption base rather than sporadic spikes or export-led volatility.

While volumes remain below the highs recorded in FY21, the improving cadence of domestic demand points to a sustained recovery in construction activity, supported by both public and private sector projects.

Exports, however, continue to act as a drag. After absorbing excess capacity over the past two years, export volumes declined 4 percent during 6MFY26, reducing their share of total sales to 18 percent, down from 21 percent last year. Political instability and disruptions at the Afghan border have constrained cross-border trade, with northern producers reporting zero exports in December. Overall export dispatches for the month fell 21 percent year on year.

Despite the export slowdown, cumulative industry growth remains aligned with expectations of 8 to 10 percent expansion in FY26, with scope for stronger growth in FY27 as monetary easing filters through and development-sector activity recovers. Public sector development spending is stabilising, while private construction is expected to gradually reawaken as tax measures and targeted subsidies take effect.

A proposed subsidised mortgage scheme, aimed primarily at first-time homebuyers, could offer incremental support to domestic cement demand, although its limited scope suggests it may not trigger a broad-based property market upswing.

Strong local demand is emerging as the primary anchor for cement manufacturers, improving pricing discipline as consolidation continues. Capacity utilisation remains a concern, however, hovering just above the mid-50 percent range, well below historical norms. The expansion cycle that peaked around FY23 has left the industry with excess capacity, a challenge compounded by shrinking exports.

For now, the sector appears to be stabilising on a narrower but firmer footing. The shift toward domestic demand provides a healthier foundation, and recent acquisitions and expansion plans by leading manufacturers indicate that the recovery is gaining enough traction to attract long-term capital.