Pakistan cement makers slash prices

Pakistan cement makers slash prices
Published: 22 February 2007

Cement companies have reduced cement prices by Rs 5-12 per 50-kg bag after government’s straight instructions to manufactures to cut prices within a week or face action. The cement industry that looked arrogant only a day earlier had to yield eventually when the government showed its teeth and gave them a week to consider reduction or face action that could have included ban on export. 
The cement companies had increased prices 15 days ago from Rs 200-220 to Rs 240-280 per 50-kg bag. The ministry of industries and production fixed the maximum retail price of Rs 260 per 50kg bag. On Tuesday the ministry instructed the companies to cut prices that was thought to be ’unjustified’. 
A trader said that the prices of about 50 percent popular cement brands’ declined by Rs 5 to Rs 12 on Wednesday after government issued instructions. He said that price of the prime quality cement has come down to Rs 243 per 50kg bag as compared to Rs 255 per 50 kg bag. 
"After this recent reduction in the prices, the average rate of per 50kg cement bag range between Rs 235-240 in the domestic market," he added. They said some companies issued new price list on Wednesday, while many other will do this today (Thursday). Presently, cement companies are under severe pressure from the government and therefore they had to reduce prices to avoid action by government. 
"As we were expecting, ministry decision has put a positive impact on the market and it has changed the trend of cement prices," they added. They said after the increase in the cement prices by Rs 20-Rs 35 during the last two weeks the impact on market, was negative and its demand decline by around 60 percent. 
Customers were waiting for ministry’s second meeting decision and now it is expected that sale of cement will pick up. They said that cement sale in Karachi alone has declined by approximately 2,500 to 3,000tpd, as a result, the total sale of cement slumped to 2,500t from 5,500tpd. 
The traders feared that it is also possible that the recent price-cut is temporary to please the government. The companies could be staging a drama and they may again increase the prices when it suits them.