Cement industry rejects criticism over price hike

Says price rise much lower than increase in rates of other building inputs.


Our Correspondent February 22, 2012

LAHORE:


Cement manufacturers have claimed that the increase in cement prices is not a lot when compared with rise in prices of other building materials and commodities over the past few years and said the industry is being unfairly targeted over the price issue.


Talking to the media here on Wednesday, All Pakistan Cement Manufacturers Association Chairman Aizaz Mansoor Sheikh said on average cement prices rose by 6.28% while steel rates went up by 15.90% and bricks cost increased by 13.14% from 2000 to the first half of the current fiscal year. Similarly, prices of other commodities including urea and sugar rose by 14.95 and 12.29% respectively in the same period.

According to Sheikh, the input cost has risen tremendously over the years with a heavy increase in diesel and coal prices as well as power tariff. On the contrary, he said, cement prices per bag rose by just 6.28% from Rs328.5 in 2008-09 to Rs350 in 2011-12.

He said energy, which constitutes more than 50% of the production cost, had taken unprecedented jumps in the last two years, but the industry absorbed the cost with efficient plants and reuse of energy mixed with heat recovery and other technology.

He said the industry produced 17.94 million tons of cement in the first seven months (July-January) of current fiscal year 2011-12, up only 3.94% compared to the corresponding period of previous year.

“An increase of 7.21% in domestic demand of cement was offset by a 3.59% decline in exports,” he stressed.

Sheikh claimed that the cement industry operated at less than 70% of the installed capacity in January and most of the manufacturers were not even recovering the input cost.

He said the industry expanded the production capacity on the assumption that the economy would grow at an average of 6% or above, but the economic growth averaged 2.5% in the past four years that weakened the demand for cement in the local market.

Published in The Express Tribune, February 23rd, 2012.

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