KARACHI, May 24: Cement makers on Thursday made the fourth price increase of Rs10 per 50kgs since January 2012, citing rising cost of production.
In January 2012, the manufacturers had raised the prices by Rs2.5 on a 50kg bag followed by Rs10 per bag rise on March 26 and April 8 respectively.
Besides rising production cost, manufacturers are cashing in on rising demand.A cement dealer said Falcon cement now costs Rs445 as compared to Rs435 while Lucky is now available at Rs435 as compared to Rs425.
A cement manufacturer said after rise of Rs10 per 50 kg bag, the ex-factory price of Falcon and Lucky cement would now be Rs420 and Rs412.50.
He linked upward revision in cement price to hike in power tariff by 9.5 per cent from May 16.
He added that peak power hour unit price is now Rs12.37 as compared to Rs11.37 while off-peak per unit price has surged to Rs7.46 from Rs6.37.
Cement price has been raised despite decline in coal price to $129 per ton C&F Karachi from $135 per ton in the last one month.
The cement maker said that devaluation of the rupee against the dollar (from Rs91 to a dollar to Rs93) has offset decline in coal prices.
He said that diesel price rise had also impacted quarry operation (transportation of lime stone from mountains to the factory on diesel run dumpers).
In any construction project, cement cost stands at 10 to 15 per cent, while 30 to 40 per cent of total expenditure occurs on steel.
A builder said that the government had no time to check the persistent rising trend in cement prices by the powerful cement cartel.
An analyst at Top Line Securities said the government had reduced the federal excise duty (FED) last year from Rs700 to Rs500 per ton and eventually it would be phased out till the end of June 2014.
As per the plan, FED is likely to be reduced to Rs250 per ton in FY13.
He expected that Public Sector Development Programme (PSDP), a part of which is spent on construction-related activities, is likely to close to Rs850 billon in Budget FY13, an increase of 16 per cent, versus Rs730 billion allocated last year.
He said improved PSDP allocation on account of election year and construction of new mid/large size dams would ignite local demand for cement.
Already in 10MFY12, local cement sales are up nine per cent which is expected to further improve by 6-7 per cent in FY13.
He said plants like DG Khan Cement and Lucky have already initiated tyre-derived fuel technology which would reduce production cost by approximately 15 per cent.