Cement prices decline while coal prices continue to rise

Cement prices decline while coal prices continue to rise
Published: 27 December 2010

Cement prices in the northern parts of Pakistan have fallen to Rs280 per 50-kg bag from the levels of Rs310-Rs320 per bag because of poor demand in the winter season. “We expect this drag in prices to continue until Feb 2011, followed by a gradual rise on the back of higher demand from reconstruction activities,” said Syed Atif Zafar, an analyst at local JS Research.

He said prices have so far averaged at Rs300 per bag. “If the current pricing level persists for the next two months, followed by a gradual rise, we can see prices averaging around Rs305/bag,” he said.
Prices in the South, however, continue to hover in the vicinity of Rs320-325/bag.

AKD Research said in a report that domestic cement prices would likely rebound in spring with the revival of construction activities. “However, challenges remain on the export front where dispatches to India have shrunk by 75 per cent year-on-year following capacity additions there. To compensate, local cement manufacturers will need to devote attention to the developing Sri Lankan and Myanmar markets.”

The report said persistent increase in input costs, particularly coal may add to pressure on the local cement sector. Coal prices have shot up to FOB $118 per ton (C&F $138) from FOB $102 per ton in November 2010.