KARACHI, April 17: Cement prices have started tumbling down following the government decision to allow duty-free import of the commodity and improved supplies to the local market because of a ban on its exports to Afghanistan from April 6.

A random market survey reveals that prices of cement declined by Rs20 per 50kg bag on Monday and market people are expecting more price cuts in case last week’s ECC decision is implemented with full force.

Falcon cement, which was available at Rs400, is now priced at Rs380, while Javedan cement is selling at Rs355 as against Rs370-375.

Karachi Cement Dealers and Welfare Association (KCDWA) convenor Shaukat Hussain said the ban on cement exports had finally made an impact on its price, adding that the real impact on price would be seen in the days to come when imported cement would start landing into Pakistan at cheaper rates.

The subsidy of Rs60 per bag on inland freight coupled with additional concession of 30 per cent on transportation through rail routes might bring down the cement price to Rs200 per 50kg bag, he said adding that consumers were expected to get the imported cement at Rs225.

Chances of Indian and Iranian cement arrivals are ripe in the market. The local manufacturers may bring down their prices in order to compete with cheap imported cement in future.

He said market players had become active and were interacting with each other to bring Indian and Iranian cement. However, he said the government should ensure that no bureaucratic hurdle or red-tape came in the way of implementing this decision.

However, Lucky Cement Limited executive director A.R. Thaplawala termed the duty-free import and grant of subsidy of Rs1,200 per ton on transportation hasty and untimely decision.

He said the decision was taken at a time when cement prices had started falling. He claimed that prices had fallen by Rs30-40 per bag in the market.

The demand for cement in the country is also on the decline owing to a slowdown in the construction activities in the wake of wheat harvesting. The coming rainy season will further reduce its demand while supply is likely to increase.

Mr Thaplawala pointed out that his company would start up two plants with a capacity of 7,500 per ton a day next month, while Attock Cement, Pakistan Cement and Bestway Cement expansion plans were also likely to come into operations by June this year.

He said the ECC decision would have a multiple impact on the country’s economy as a huge amount of foreign exchange would be spent on cement imports and the subsidy of Rs1,200 per ton would be a heavy burden on the economy. He said foreign exchange would not come into the country following the suspension of cement exports to Afghanistan.

“The government should withdraw Rs750 per ton excise duty on local cement manufacturing so that prices could be brought down,” he said, adding that the duty-free import would hurt the expansion plans of cement manufacturers.

Suleman Amir Ali of Invest Cap and Securities thinks that cement prices may come down to Rs285 from Rs350-380 per bag. However, he said the government should keep in mind several factors that may hamper the expected decline in prices at the domestic level. He said that so far no SRO had been issued by the CBR regarding the ECC decision on subsidy. Secondly, the quality of cement from India and Iran is not as good as produced locally.

Association of Builders and Developers (ABAD) chairman Hafeez ur Rahman Butt said the ECC decision would help revive the construction industry. He cautioned the government that some vested interest might create hurdles in the way of smooth implementation of the decision. He urged Prime Minister Shaukat Aziz to actively monitor the activities of cement makers who might make some move to counter the decision.