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Cement price set to increase

April 21, 2013

Cement bags — File Photo
Cement bags. — File Photo

KARACHI: The cement industry anticipates an increase of Rs50 per 50-kg bag following a hike in transportation costs of cement and coal.

So far, the impact has not been passed on to the consumers despite the fact that decision of raising freight charges by goods carriers became effective from April 14, cement manufacturers claimed.

“We are currently bearing the rising transportation cost and watching the market situation which looks quite uncertain,” a leading cement maker said.

Meanwhile, cement retailers said that the prices of cement bags had been intact for the last few months. Good quality cement carries price of Rs435-450 per 50 kg bag.

Chairman All Pakistan Cement Manufacturers Association (APCMA), Aizaz Mansoor Shaikh estimated Rs50 as additional cost on a 50 kg bag in case the decision of hike in freight charges is fully implemented.

“It is up to the cement manufacturers how they would pass on the impact at the retailers’ end keeping in view market situation,” he said.

While many companies fear decline in their sales in case prices are raised, the APCMA chief said that quite a few companies have not been lifting coal and not making deliveries after April 14.

He said the load limit restricts the producers not to carry more than 50 tons of raw material and finished goods on the goods carriers. It will create a crisis as the country needs at least 50 per cent more trucks and vehicles to cover up the load.

Prior to April 14 decision, a truck or good carrier used to carry up to 80 tons of load. Now the industry needs to manage another truck or vehicle to carry the balance 30 tons.

He urged the government to intervene and immediately stop all of the sudden imposition of axle load restriction as it will hurt the industry. Meanwhile, a cement maker said that the new decision on axle load should be introduced gradually so that the related businesses could adjust their requirement and resources accordingly.

The carriers’ association had increased charges besides limiting the load volume per vehicle as per instructions of the concerned government authorities. The rise in transportation charges was announced by All Pakistan Combined Goods Transport and Transporters Welfare Association and the new charges were effective from April 14.

Market sources said the transportation union in Karachi has become so strong that it has been virtually dictating terms. Rates are fixed daily by the union for trucks loading from Karachi/Port Qasim for upcountry and from factory to Karachi and Karachi port. In fact, the union representatives are now even going to the respective factories to ensure increase in freight rates for movement from factories in the north to Karachi port.

Sources said that this increase in transportation cost will impact heavily on different commodities, especially cement which suffers the double impact both in terms of inward transportation of raw material and coal from ports to upcountry and transportation of finished products to ports for exports and local markets for domestic consumption.

Cement industry in Pakistan is using imported coal as its fuel and due to axle load implementation, freight cost for transportation of coal have seen an increase ranging from Rs900 to Rs1,400 per ton depending upon the supplies to factories upcountry.

Many industries not only receive supplies of raw, packaging material through goods carriers but they use trucks for dispatching their branded bags to retail markets and exports.