KARACHI, March 4: Cement prices have increased by an average of Rs5 per bag in the last two weeks, a senior executive of a cement manufacturing company revealed on Saturday.

The increase was on the back of a huge surge in demand as winter has melted away into spring, giving strong impetus to construction activities all over the country. During February this year, cement dispatches registered a staggering 44 per cent increase over the corresponding month of the previous year. That more than made up for the shortfall that was experienced in January mainly due to a biting winter and Eid holidays.

Cement companies posted top line growth in the first half of the current fiscal (July-Dec) at 49 per cent, while profit after tax of the industry during the period increased by a phenomenal 86 per cent.

“Recent increase in cement prices has not been uniform all across the board, but have risen from Rs2 to Rs6 per 50-kg bag, depending on the quality,” the cement company executive said. Although, making an effort to keep the concrete prices low, producers have not ruled out the possibility of an increase, which they say, could be inevitable to cover rising interest rates, higher gas prices, freight and other costs. Financial charges of the sector had significantly increased by 57 per cent to Rs648m in the first half of the current fiscal.

Producers and dealers are expecting a further boost in dispatches as traditionally, the last quarter (April-June) sees construction activities at their peak due to long summer days. Apart from the usual construction works under PSDP, irregular and massive built-up of houses, flats and industries as well as development of canals this year, the producers would also have to meet strong demand generated from the government’s programme of rehabilitation and reconstruction in the earthquake devastated areas.

The construction of some 3.3 million houses is expected to begin next month. That would cast further pressure on supplies, until substantial expansion capacities come on stream.

Market experts’ outlook for the sector remains strong in the medium to long term and the All Pakistan Cement Manufacturers’ Association is looking at full year growth at 15 per cent in line with the last two years.

Interestingly, during February, Indian cement makers had also raised retail prices by about 15 per cent, following a recent court ruling restricting the loading of cement on trucks. Indian producers thought that prices could rise further in March as investment in houses and roads helped raise demand in India—the world’s largest market for cement after China.