The Material Sector – The Scavengers of Recovery

Softlogic Research, in its most recent publication took a very strong stance on the Material sector, predicting a strong growth backed by an economic recovery and the renewable energy drive. Digging deeper into the trickle-down effects of core economic policies such as protectionism and economic stimulus, the publication deals with the potential benefits of such policies on individual industries and listed corporates in the years to come.

The research reveals that the construction material sector will be a clear winner from the pack, with the cement, tile, aluminium, cable and pipe industries receiving a significant boost in the coming years. Growth is said to be driven both by retail demand due to the low interest rate regime and by government spending based on the 2021 budget allocations.

In addition, the publication reveals that the country’s strong shift to renewable energy backed by government proposals and ADB loan facilities would significantly boost the demand for the required raw materials such as cables and aluminium needed to set up household solar panels.

The report also covers the performance of key material exports such as hand gloves which saw a phenomenal demand spike with the advent of the COVID-19 pandemic, while providing an outlook on the future expectations of the sector going forward as the vaccine rollout gets into gear. Activated carbon ranks as another key material export which is expected to show exponential growth in line with an electric vehicle boom, as the country’s leading manufacturer, Haycarb PLC has secured contracts with Tesla.

The report also highlights a positive side of the loathed LKR depreciation in terms of how select industries would stand to benefit, as exporters receive higher prices and local products become more competitive in the market, whilst comparing the sector’s performance during the critical lockdown period.