Pakistan cement prices fall further

Pakistan cement prices fall further
Published: 04 July 2007

Cement prices in Pakistan have fallen further by Rs10 per 50kg bag, standing at Rs195 in the local market compared to the previous level of Rs205.

In the last 15 days, the cement rates have dropped by Rs45 per bag due to the inactive manufacturers’ cartel and slowdown in construction activities caused by recent heavy rainfall.

Dealers said the cement manufacturers’ control over supply had weakened and demand had also dropped due to the current monsoon rains.

On the other hand, industry experts believed that the ongoing rainy season was not the only reason for the slowdown of construction activities across the country. They said high mark-up on loans had also hit the industrial activities.

A large number of industrial units have stopped work in the wake of high interest rates.

The government’s policies regarding building bylaws were also blamed for the lacklustre construction activities, they added.

The experts said the construction growth in the country during the last year stood at 17.7 per cent, which would likely drop by five per cent this year. Construction growth would be around 12 per cent by the end of the current fiscal year unless a mega project is launched during the period.

However, the decline in cement prices is a good sign for those who have been unable to construct their houses, but ultimately it would hit the cement industry. The experts said the government should tackle the situation in a bid to protect all stakeholders.

They predicted the cement cartel, which had been inactive due to some rift among the producers, would emerge again within a couple of weeks, leading to a rise in the commodity’s prices.

They called for breaking the manufacturers’ cartel as the sale of cement at Rs195 per bag was still profitable for them.

At present, total production capacity of the cement manufacturers stands at over 33Mt while the demand is around 20Mt, leaving a substantial quantity for exports. However, the exports are not enough to utilise the surplus production.

Marketing manager of a cement company, talking to The News, said the export of cement to Afghanistan had dropped due to the rainfall. Besides that, logistic problems were always a hurdle in the way of cement exports to India. The demand of the local industry had also come down, he added.