LAHORE, Sept 12: Cement manufacturers on Monday indicated that the cement price may surge further due to the recent rise in the rates of furnace oil and diesel, which had raised the cost of power generation and transportation in the country.

In a statement issued here following a general body meeting of the All Pakistan Cement Manufacturers Association (APCMA) held to review the cement prices and supply situation and consider the impact of the government’s decision to allow unrestricted, tax and duty-free import of cement on the industry.

The APCMA said the supply position had improved in August, and total quantity released by the factories exceeded 1.5 million ton for both the domestic and exports markets, showing an increase of 17.60 per cent over the corresponding month last year.

It said the supply position improved after various plants, which faced unscheduled closure in June and July, restarted their production operations, and other units successfully completed the optimization programmes. It said cement dispatches were likely to continue to increase during the remaining months of this year as additional capacity came on line.

“These developments have had a salutary effect on prices which range from Rs240 per bag to Rs285 per bag, which are considerably off from the spike in the prices witnessed during June,” said the APCMA.

It further said all efforts would be made to bring even larger quantities of cement into the market to stabilize prices, but the enhancement in the rates of diesel and furnace oil would certainly impact the prices of the commodity. The statement implies that even the improved supply position is no guarantee to stability in the cement prices.

The APCMA also feared that the government’s decision to permit import of unrestricted quantities without payment of duty and six per cent withholding tax may result in dumping of the substandard cement from India and China.

“We hope that government will not allow low grade cement to be imported, which, if used could endanger stability of load bearing structures in view of its lower strength. Some major accidents have been reported in China and India, where plastering cement was used in concreting,” it said.

The manufacturers agreed that pending augmentation of capacity during the remaining part of the financial year, limited quantity of cement should be allowed to be imported on “concessional basis and APCMA had recommended to the government accordingly.”

However, it said, the government “seems to have gone overboard in allowing the imports to be made without any tax or duty at all that amounts to withdrawal of protection to the domestic industry which has to pay different rates of import duty on such inputs as fuel and lubricants, kraft paper, coal and stores and spares.”

The APCMA said it was also not understood why import of cement should have special treatment of exemption from income tax.