D.G. Khan Cement is adding a giant kiln at a difficult moment for Pakistan’s cement industry. Plants across the country already have more capacity than the market can fully absorb, yet producers continue to announce new investments.
In FY2025-26, cement dispatches stood at about 50.5 million tonnes, while industry utilisation remained near 59%. With kilns operating well below full capacity, the decision by D.G. Khan Cement to expand raises an obvious question: why add more capacity to an already crowded market?
For DG Khan Cement, however, the answer is rooted in a long-term loss of market share.
The Cost of Standing Still
In 2008, D.G. Khan Cement accounted for roughly 21% of industry net sales. By 2025, its share had fallen to around 8%.
The company continued operating plants at Dera Ghazi Khan, Khairpur and Hub. Its Hub facility also provided export flexibility when domestic demand weakened. What the company did not do at the same pace as competitors was add significant new capacity.
That decision came with a cost.
In the cement industry, excess capacity across the market is a challenge. But for an individual producer, insufficient capacity can be an even bigger problem. Competitors add production lines, expand their dealer networks and capture market share. Once customers shift to other suppliers, winning them back can require significant spending and time.
For DG Khan Cement, expansion is therefore not simply about chasing industry growth. It is also about rebuilding scale after years of falling behind competitors.
A Record Line in an Oversupplied Industry
The company is now responding with Pakistan’s largest single clinker line: an 11,000-tonne-per-day facility at its Dera Ghazi Khan site.
The brownfield project is expected to cost around Rs45 billion and could take the group’s overall capacity towards 10 million tonnes annually.
On paper, the project represents a catch-up strategy. In practice, it enters a market that has yet to absorb capacity added during the previous expansion cycle.
Other cement groups are also adding production capacity, creating a clear contradiction in the industry. Plants are operating at roughly half capacity, yet companies continue to invest in new lines.
The internal logic for DG Khan Cement is straightforward. Waiting for industry utilisation to improve before expanding could allow competitors to widen their lead. Building now carries the opposite risk: the company could end up with additional clinker capacity before demand has caught up.
That leaves the investment dependent on a combination of domestic demand growth, exports and competitive changes within the industry.
Who Pays If the Bet Goes Wrong?
The risk profile is different from sectors where excess capacity can ultimately become a burden on the public sector.
DG Khan Cement is committing its own balance sheet to the project, including debt financing. The new kiln therefore has to generate sufficient returns for shareholders and meet its financing obligations.
But private investment does not eliminate the broader market implications.
If several producers continue adding capacity while demand remains weak, competition could intensify. Lower utilisation and weaker cement prices could put pressure on margins, particularly for companies carrying substantial financing costs. Over time, weaker producers could face greater financial stress or be forced to rationalise capacity.
For DG Khan Cement, the immediate issue is more specific. After years of losing market share, the company has chosen to expand rather than remain smaller in an industry where scale matters.
A Bigger Bet on Scale
The 11,000-tonne-per-day clinker line is therefore more than another capacity announcement.
It represents DG Khan Cement’s attempt to reverse a long decline in market share and restore its competitive position. The challenge is that it is making that bet while Pakistan’s cement industry continues to carry substantial surplus capacity.
The project will ultimately be judged not by the size of the kiln, but by whether the additional capacity can generate sustainable volumes and returns.
For DG Khan Cement, the choice is between the risk of investing in a crowded market and the longer-term risk of allowing competitors to keep taking its share.