KARACHI, March 8: Price of cement has climbed up by an average Rs10 a 50kg bag in the market, but cement giants, operating under a powerful cartel, are expressing ignorance about the issue of sudden price hike.
A random market survey showed that the cement dealers in the city are quoting rates according to their whims, depending on the area locations and orders placed by the contractors or general public.
For instance, a dealer quoted price hike in Falcon cement to Rs240 from Rs236, while another dealer showed the price of the same cement to Rs242-245 as compared to previous Rs232.
Some dealers said that the price of Pakland, after an increase, has been set at Rs230 as compared to Rs221, while other dealers have quoted the price at Rs225 as compared to Rs215.
Same is the case with Essa cement as many dealers are charging Rs200 after a rise of Rs10 per bag, while many dealers are demanding Rs210 as compared to Rs200. Dadabhoy cement is now selling at Rs210 as compared to Rs200.
A 50 kg bag of DG Khan Cement is now being sold at Rs240 as compared to Rs233 while Zealpak cement is being sold at Rs210 as compared to Rs200. Majority of the dealers tried to skip the genuine reason behind the increase in the prices but some dealers said that manufacturers have actually increased the prices in the last couple of days.
Meanwhile, the chairman, All Pakistan Cement Manufacturers Association (APCMA), Tariq Saigol denied any price hike made by cement makers. "There is virtually no increase in price yet," he told Dawn from Lahore on Monday in an anger tone, saying that he has been receiving reports about price hike from the markets but prices have not been increased.
Instead of giving any further details, he asked this scribe to give names of the dealers who have enhanced the prices. Prices of other items are on the rise instead of cement, he added.
Former Chairman Association of Builders and Developers (ABAD), Hafiz-ur-Rahman Butt has said that since the cement makers have focussed their attention on exporting cement to Afghanistan, the local markets are now facing shortage.
He said price hike in cement ultimately results in raising production cost of housing and private sector projects. In housing projects, cement holds the share of 25 per cent while in big construction projects its share ranges between 30-35 per cent.
He urged the government to immediately intervene. "There is a need to break up the cement cartel, and the Monopoly Control Authority (MAC) should now become active to check the cartels and rescue the general public," Butt said adding that construction industry is now already groaning owing to phenomenal jump in steel product prices, specially re-rolled steel bars whose rates have touched new peaks of Rs55,000-60,000 per ton from Rs25,000 in the last 10 days in the open markets.
Meanwhile, State Cement Corporation of Pakistan Private Limited has stated on Monday that the Corporation has not increased any prices. The Corporation cannot revise its prices as it acts under the Ministry of Industries and Production, which approves the downward and upward revision in prices of State Cement, the company statement said, adding that the Corporation has neither increased nor decreased the rates of cement in the last nine months. The share of state owned cement company in the overall country's cement production has reduced substantially.
An analyst at the Khadim Ali Shah Bukhari Securities said the formation of the cartel to jack up cement prices to Rs220 per bag, not passing on any benefit to the end users from the central excise duty cut and the continued short supplies in the markets, are the norms which currently prevail in the markets and the government is happily living with it.
During the first eight months of 2003-2004, demand has seen an increase of nearly 13 per cent to over seven million tons whereas February was an exceptional month with 22pc year on year growth.
The local market was slightly less exciting with 9.5pc demand growth whereas exports have shown a 195pc year on year improvement, he said. The capacity utilization for the year remained at over 71 per cent.
Another cement sector analyst said that the industry fundamentals have improved mainly on the back of cut-fuel costs due to conversion to coal, sharp drop in financial charges as a result of restructuring of expensive debts, rise in average cement retention price, fairly visible revival in the construction industry, surge in exports and 25 per cent cut in Central Excise Duty on cement in last budget
