Cement prices rise further as demand picks up

High coal prices, rupee devaluation also behind price hike

KARACHI: Cement prices have gone up continuously in the country over the past three to four weeks apparently in the wake of pickup in development work ahead of general elections in the middle of this year.

Prices have been increased by up to Rs60 per bag, including a rise of Rs10 in the past couple of days, according to market players.

Lahore recorded the largest increase of Rs50 to Rs60 that took the price of a cement bag to Rs590.

Cement prices traditionally stay low in the northern region compared to the southern areas, particularly Karachi, but currently the price gap has shrunk.

“An extraordinary price increase in Lahore is apparently due to development work ahead of general elections and may come down after two to three months,” said analyst Saqib Hussain Khan of Sherman Securities.

However, other industry watchers believe the price may not revert to previous levels as the market is facing price pressure.

“Hike in coal prices, rupee plunge of about 5% on March 20 and strong demand were the factors which led to this hike in cement prices,” commented Atif Zafar of JS Global Capital Limited.

Average prices across the country rose from Rs521 on February 26 to Rs543 on April 2 with average weekly increase of more than 0.7%, according to the weekly price update of Arif Habib Limited’s Investor Watch.

Rapid large-scale infrastructure development under the China-Pakistan Economic Corridor (CPEC) and hefty allocation for the Public Sector Development Programme have propelled cement demand in the domestic market.

Cement prices have swelled more than double since 2013 from Rs250 to Rs590 per bag, said Wali Bhai Patel, a Karachi-based cement dealer.

Pakistan’s cement production depended on exports for a long time, but for the past few years, domestic needs have provided a vital cushion on the back of improving macroeconomic indicators and expanding construction activities.

Dynamics of the cement market are changing fast in Pakistan as half a dozen companies are going through an expansionary phase with combined investment of over $1.5 billion.

Cherat Cement, Attock Cement, DG Khan Cement, Lucky Cement, Power Cement, Bestway Cement and others have unveiled their expansion plans and all these projects will come on line in the next couple of years.

Published in The Express Tribune, April 4^th, 2018.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.