Cement prices rise again

KARACHI: Cement prices in retail markets continue to increase despite a slowdown in construction activities.

Market sources have revealed that the price of a 50kg bag has risen to Rs315 in Sindh while in Punjab and other northern areas the same is being sold for Rs320 per bag.

Cement manufacturers have pointed towards the rising cost of production for the latest increase. “Electricity tariffs are increasing at an average of 2 per cent per month,” said a representative of the cement manufacturers association, Brigadier Niazi, adding “since July we have witnessed an increase of six per cent and another two per cent rise is on the cards.”

He said prices of coal and other inputs have also gone up. “Gypsum and iron ore are imported and due to the constant weakening of the rupee, these imports are becoming more and more expensive each week,” said Niazi.

“Add to that the cost of transportation which is a significant part of our cost along with electricity and coal and you can see that it is but natural that prices will continue to rise,” he added.

“Prices of cement have increased steadily by Rs2 to Rs4 per week in recent weeks,” commented Topline Securities analyst Furqan Punjani. “Normally prices come down in winter months because construction activity is slow during this time in most parts of the country and manufacturers try to ensure that some minimum volumes keep moving,” said Punjani.

Experts also highlighted that reconstruction activity in flood-ravaged areas has so far been slow and limited. They say that so far there has not been any significant increase in demand for cement and other construction materials due to reconstruction efforts.

On the other hand, international demand for local cement has also stalled over the past two months. Cement manufacturers say that due to the constantly rising cost of production, the local industry has lost its competitiveness in cement and clinker markets abroad.

Dealers asserted that demand had shown signs of improvement in October after a dull market over the previous two months. However, they expect activity to slow down once again until after Eid holidays.

Published in The Express Tribune, November 7^th, 2010.