Cement prices rise Rs 5-10 per bag

Cement prices have increased by Rs5-10 to Rs315 per bag in retail markets across the country.

The latest hike has been attributed to a rise in ex-factory prices of cement and higher cost of transport for cement dealers.

A representative of cement manufacturers association, Brig Niazi, told The Express Tribune ex-factory prices of cement increased by about Rs200 to Rs5,800 per ton last week. “Cost of transportation and cost of doing business for retailers have increased on the back of rising fuel prices and electricity tariffs.”

Niazi also pointed out that coal prices are increasing in international markets. “As a result of this, cost of production will rise further for cement manufacturers.”

Manufacturers argue that prices of coal, which is a major input in cement making, have increased from $80 per ton in September 2009 to more than $115.

Niazi asserted “Cement companies have not passed the full extent of the increase in cost of production to customers. If they had, prices would have increased much more, possibly by Rs50 per bag.”

Cement dealers say the increase in electricity tariffs, just after a recent increase in sales tax has squeezed their margins. A Karachi-based cement retailer said prices may taper off in the coming weeks. “During Ramazan, construction activity normally slows down so at that point we will have excess supply,” he said.

But cement manufacturers rule out any permanent price reduction in the near future. They say a majority of cement companies are already absorbing losses due to high cost of production and stagnant demand. Under such conditions, they argue cement companies have little choice but to pass further increases in cost of production to consumers.

Retail prices of cement stood around Rs280 per bag in Karachi at the beginning of the current year. In Punjab and northern markets, they stood at Rs290 at the same time.

Published in The Express Tribune, July 13^th, 2010.