The cement prices got the raise of Rs5-10 per 50 kg bag at the retail level after experiencing persistent depression in the first quarter of fiscal 2007-08, it is learnt here Tuesday. The cement price of 50 kg bag was Rs 205-210 last week is now being sold for Rs 210-215 at retail level.
Talking to The Nation, the industry sources confirmed that the ex-factory cement prices have now improved slightly by Rs 5-10 per bag. Talking about the main reason for the recent rise, they termed that the upbeat cement demand in the country following the booming construction activities was the main reason. They said that northern manufacturers felt that the cement market in the north is not facing supply glut and there is some room for jacking up prices.
On the other hand, prices in the south have declined by Rs10-12 per bag. The decline was being attributed to the supply coming from the north due to better prices in the south as well as export prospects through sea to India and Middle East. Consequently, the price disparity between south and north has now reduced to Rs20-25 pet bag. However, these sources said that the price increase was a temporary phenomenon as of the upcoming winter season. The working hours during winter usually fall considerably, especially in the north, causing the cement demand to come off significantly. However, on the other hand total cement sales have shown a decline of 7 percent in October this year to 2.35mn tons. The primary reason for the decline is the fewer working days during the previous months.
Cement Manufacturers Association chairman Aizaz Mansoor Sheikh showed his ignorance about rise in cement price rise, however, he said that the price fluctuation trend was there in the market, which was nothing to do with the ex-factory price. He said that the combined profitability of the cement sector had depicted a decline of 51 percent in fiscal 2007, compared to their earnings the last fiscal. Although the total cement dispatches of the industry increased by 32 percent, low retention prices is the primary reason behind their lower profitability for the year. The cumulative profits of companies for fiscal 2007 stood at Rs5.7 billion as against Rs11.6 billion as against the corresponding period of last year, showing a decline of 51. Despite improvement in cement sales by a massive 40 percent, the companies’ net sales depicted just 1 percent growth mainly on account of lower retention prices. Resultantly, gross margins with increased raw material cost declined to 22 percent in fiscal 2007, which was 42 percent in fiscal 2006.