Karachi: The price of cement has reached to a record level of PkR 415 per bag in the northern areas of the country after witnessing an increase of PkR 30/bag, up by 7.8% in September on MoM basis while, the prices of cement in the south region remained unchanged at PkR 385 per bag.
According to Alfalah Securities, cement prices have also depicted an increase of 30% and 20.31% in the North and South region respectively in September 2011 against the corresponding period last year. The Cement industry constitutes to 24 cement plants out of which 19 plants are in the North region, mainly due to high availability of key raw materials such as limestone.
However, the plants in the northern region are required to pay higher freight charges on import of coal and furnace oil and also incur high transportation cost on cement exports as compared to the south region. Cement manufacturers have claimed that a rise in cement prices is attributable to prevailing energy crisis due to which the plants are operating at 50% of their installed capacity while the sluggish demand in the country has also forced the cement producers to increase prices. It is important to note here that the Cement sector was given some relief in the current budget FY12, according to which FED was lowered from PkR 700/ton to PkR 500/ton, GST was decreased by 1% along with the abolition of SED. All these factors would have lowered the cement prices however; the results have been totally opposite.