KARACHI: Amid rising demand on account of growing construction activities in public and private sectors, cement makers continue to raise prices linking them to higher coal prices in the world market.
Overall domestic cement sales rose by 17 per cent to 27.65 million tonnes in 7MFY21, while exports also grew by 10.23pc to 5.71m tonnes from 5.186m tonnes in the same period last year.
As a result, the cumulative cement dispatches (local and exports) were 33.36m tonnes that were 15.77pc higher over the corresponding period of last fiscal year.
In January, cement sector posted a growth of 16.28pc as compared to January 2020. Total cement dispatches in January were 4.73m tonnes against 4.07m tonnes same month of last year.
Local cement sales during January increased by 23.67pc to 4.03m tonnes compared to 3.26m tonnes in January 2020. However, exports dropped by 14pc to 694,934 tonnes in January from 808,874 tonnes in January 2020.
Exports down 14pc in January
Builders have received a message from D.G. Khan Cement Ltd (DGKL) regarding Rs15 per 50 kg bag hike from Feb 1 owing to constant increase in coal prices in the international market from the last few months and increase in transportation cost of cement and coal due to rising fuel prices. Higher fuel prices, electricity and overheads are resulting in high cost of production.
According to builders, Power Cement had also raised the price by Rs15 per 50kg bag from Feb 1.
Shankar Talreja of Topline Securities said cement prices in the North region had been increased by Rs10/bag from Jan 20 due to soaring coal prices.
Coal prices increased to around $92 per tonne (FOB) in January compared to $60 per tonne in the end of October 2020. Coal is primarily used as fuel in cement production, while some of the companies also use it for power consumption purposes.
The increase of $30 per tonne in coal prices translates into increase in cost of cement production by over Rs30-32 per bag, he said, adding in December 2020, cement prices increased by Rs20 per 50kg bag.
According to the data released by All Pakistan Cement Manufacturers Association (APCMA), during the first seven months of this fiscal year, North based mills dispatched 23.54m tonnes for domestic consumption that was 17.18pc higher compared to 20.09m tonnes.
APCMA spokesman said the cement sector is facing major cost increase due to rising coal prices, while diesel and petrol prices had been raised for the fifth time in the past three months.
“There is a declining trend in exports in the last three months as the cement manufacturers are losing competitiveness due to high fuel and energy costs,” he said.
Published in Dawn, February 3rd, 2021