KARACHI: Cement prices have been increased by Rs35 per bag (around 7 per cent) following government’s decision of changing the Federal Excise Duty (FED) mechanism from variable five per cent of Marginal Retail Price (MRP) to a fixed Rs1/kg (Rs50 per bag).

The government has also reduced import duty on coal from 6pc to 5pc.

Cement producers raised prices from around Rs515/bag to Rs550/bag, an analyst at Top Line Securities said.

This is positive for the industry. He assumed that cement manufacturers would increase prices in two phases -- in 1QFY17 and 2QFY17.

He said cement manufacturers have made changes in their quotas to accommodate this price hike.

According to Sajjad Hussain at BMA Research, the recent upturn in coal prices reaching $58/tonne level, has raised concerns for cement industry margins.

Coal prices rebounded primarily due to higher consumption in the US and production roll backs in China. However, expectations regarding UK’s exit from EU may trigger yet another commodity price slump, thereby reverting prices to lower levels, he said.

Published in Dawn, June 29th, 2016