KARACHI, March 13: Pakistani cement producers are scrambling to load cement bags on ships sailing to Dubai in order to take advantage of 40 per cent jump in prices over the past eight months. Sheikh Mohammed bin Rashid Al-Maktoum, the ruler of Dubai issued a decree on Wednesday, announcing removal of 5 per cent customs duty, providing further incentive to exporters from other countries.

Bilal Hameed, sector analyst at JS Global, stated in a report on Thursday that cement prices had touched record high levels in many countries throughout the world. In 2008 alone, prices in the UAE first increased from 16 dirham or Rs273 per bag ($87 per ton) to 22 dirham or Rs376 per bag ($119 per ton), and were currently ruling at more than 25 dirham or Rs427 per bag ($136 per ton). Similarly, prices in Russia had reached $280 per ton (Rs860 per bag) while in India they averaged around $118 per ton (Rs365 per bag).

The analyst said that increasing regional price was benefiting Pakistani companies who were able to export the commodity at a price premium. “Initially, cement was being exported to the UAE at FOB price of $60-65 per ton which had now jumped to $70-75 per ton,” says the analyst. In Jul-Feb, export of concrete has already made to record high of 4.3m tons. “As per our estimates, we expect cement exports to reach 6.6m tons in FY08,” says Bilal.

The local market, however, presented a different picture where prices were on a declining spree during FY08 due to the commissioning of new capacities, which created an over supply situation. According to the analyst, ex-factory cement prices had dipped to a low of Rs170-180 per bag ($55-60 per ton) in 1QFY08 whereas, they were currently hovering around Rs225 per bag ($73 per ton), well below regional prices.

Analysts say that so long as local consumers receive supplies abundantly and at relatively low prices, higher exports should be celebrated as a means of attracting much-needed foreign exchange in the country. Local builders and developers may not necessarily agree with that view.