LAHORE, Jan 5: Cement prices in the Punjab capital refuse to come down even after the passage of two and a half months, hitting the small consumers hard.

The cement rates began rising a couple of weeks before Eidul Fitr and jumped to about Rs270 per bag from Rs228-235.

The prices dropped a week after Eid to settle down at Rs245-250 per bag, but again started increasing. At present, the retail cement prices in the provincial capital continue to hover in the vicinity of Rs280-290 per bag or even higher depending upon the brand and the area.

In certain areas, some consumers complained, "they are facing hard time in getting cement in small quantities" even at the present rate. The industry sources blame shortage of transport and increased freight rates due to the rising petroleum rates for higher cement prices.

"Transportation costs owing to an increase in POL prices and outright shortage of transport capacity because of the record cotton crop and the movement of goods in general as a consequence of increased economic activity has resulted in increase in cement prices in the domestic market.

Inflationary pressures as a result of increased price of imported coal have also contributed to it," said All Pakistan Cement Manufacturers Association chairman Tariq Saigol.

"In certain regions of the country, transport constraints have led to abnormally high prices and some element of profiteering on the part of the retailers," he said in a statement on Wednesday. But, Mr Saigol said, "The APCMA was making efforts to increase the availability of larger cement supplies in areas where there's an exorbitant rise in the prices."

He, nevertheless, added that "it would not be possible for the industry to maintain the previous price line in the retail market owing to such factors as increased coal price, discontinuation of supply of natural gas in winter to the cement sector, higher cost of freight and sharp rise in the interest rates.

"Although efforts will be made to operate the plants at maximum capacity to meet the increased demand and keep the prices around Rs250 per bag," he said. Meanwhile, the APCMA said, the cement demand continued to rise during the first half of the current fiscal year ended on Dec 31, 2004, despite a dip in the last two months (Nov and Dec) owing to the advent of winter and closed holidays.

During July-December, capacity utilization for domestic market and export has been recorded at 87.25 per cent, which compares to 75.13 per cent for the corresponding period in 2003-04.

Total cement sales in domestic market went up to 7.035 million metric tons, showing 21.23 per cent surge over the last year. The cement exported during the first six months of the current fiscal surged to 777,352 metric tons, reflecting an increase of 58.52 per cent over the corresponding period last year.

"Thus the total sales grew by 24.14 per cent during the first half of this fiscal as compared to last year," the APCMA said. "As the infrastructure projects become fully mobilized and the boom in the housing sector takes root, we expect cement demand to become even more buoyant in the second half of the year with over all capacity utilization to exceed 90 per cent," the APCMA said.

The APCMA said most cement plants had undertaken modernization and balancing at full swing while "several plants were in various stages of construction and most of our members continue to gear up their existing capacity as demand surge would require most plants to operate at almost full capacity," it said.

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