Moratorium on cement exports

Moratorium on cement exports
Published: 04 April 2006

The Pakistan cement industry and the government have reached an agreement to put a moratorium on cement exports for 25 days to contain its rising prices. This was announced here on Monday after a meeting of the federal Minister for Industries and Production, Jahangir Khan Tareen, with the All Pakistan Cement Manufacturers Association (APCMA) and the Association of Builders and Developers (ABAD).

The meeting also decided to import cement to meet a “temporary gap” in demand and supply in the country. In return, the government also offered to run special trains to facilitate movement of imported cement to upcountry market. Another follow-up meeting will be held with the Ministry of Railways on April 6 to finalise arrangements.

The government asked industry representatives to take steps to bring down prices to the January 2006 level. The two sides agreed to observe a moratorium on export of cement from April 6 to 30 and after that review it in the light of the prices. This will result in availability of an additional 200,000t of cement in the domestic market. The meeting was informed that cement factories were currently running at 86 per cent capacity utilisation against 91 per cent last year under similar circumstances. The two sides also agreed to increase capacity utilization to 92 per cent with immediate effect to bring an additional 91,000t of cement every month.

The cement industry informed the government that the present increase in cement prices was due to an excessive demand. Industry representatives claimed that it was a temporary phenomenon and by September this year the capacity of cement plants would be increased considerably to cater to the increased demand.

Cement prices have increased between Rs50 and Rs60 per 50-kg bag over the past few weeks. What was earlier being sold at Rs270 and Rs280 is now being sold from anything between Rs320 and Rs330. This price increase has started affecting the construction industry. The construction industry had informed the government that the manufacturers had reduced cement production in order to create an artificial shortage in the market to get higher prices, similar to the tactic adopted by the sugar cartel. Cement manufacturers, on the other hand, have been claiming that they had increased prices by just a few rupees per bag but the dealers were charging higher rates. They also claimed that increasing cement exports to Afghanistan, both through legal and illegal means, was resulting in a shortage in domestic supplies.