Cement price hike causes concern in Pakistan

Cement price hike causes concern in Pakistan
Published: 10 February 2005

While overwhelming increase in demand for cement brings windfall profits, the cement units instead of reducing cement prices are ruthlessly fleecing the consumers.

The increase in cement prices are due to cement cartel of the cement manufacturing units in the private sector but now Jawedan Cement operating under State Cement Corporation, a public sector entity, has also joined the bandwagon by increasing the cement prices.

Criticizing the move by the government sector unit, Babar Mirza, Chairman, Association of Builders and Developers (ABAD) has alleged that the cement cartel enjoyed the blessings of the government, which encouraged them to increase prices. The increase in cement price by government owned unit was suggestive of a support of the government under the cover of the cement cartel. If this conclusion was true the booming housing and construction industry would suffer a serious dent, which ultimately hit the interest of the common man, Mirza said.

He strongly urged the government to take steps to reduce cement prices at least by 60-70 per cent to enable the housing and construction industry to continue its economic activities.

Contrary to the increasing demand for cement which goes up by 21 per cent, the cement manufacturing units making claims of 7.6 per cent decline in sales just to go for an increase in prices.

Figures released by the All Pakistan Cement Manufacturers Association (APCMA) indicate that cement demand growth during January 2005 slowed down to 7.6% as against the 20% plus growth witnessed during most of the first six months of 2004-05.

According to industry sources, this slowdown is seasonal. Cement sales during January stood at 1.23Mt with local sales and exports amounted to 1.17Mt and 53,000 tons respectively. Exports to Afghanistan have also decelerated markedly on shipment delays and closure of routes due to the winter season. Overall demand growth during July-Jan 2005 is up 21.5% to 9.04Mt as against 7.43Mt during the corresponding period of last year.