KARACHI: The start of construction work on new small apartments’ projects and large scale renovation of houses have pushed up the local demand and sales of cement.
Around 35-40 new projects of small apartments have been launched in Karachi since Ramazan last year. Many people have started renovation of their houses as they think that it is the right time as steel prices are comparatively low this year along with fall in cement prices.
According to figures provided by All Pakistan Cement Manufactures Association (APCMA), total local sales in July-Feb 2009-10 surged to 14.596 million tons from 12.855 million tons in the same period of last fiscal.
The rate of cement bag in Northern Region ranges between Rs240-250 per 50 kg bag, while in Southern Region the price, hovers between Rs260-300 per bag, the association official said.
Local sales of cement in 2007-08 were 22 million tons as compared to 20.5 million tons in 2008-09, while the industry is expecting sale of 21.5 million tons at the end of current fiscal year.
However, the official said that the government is pocketing Rs68 per 50 kg bag in terms of taxes and duties (Rs35 as excise duty, Rs30 as sales tax and Rs3 as special excise duty).
The average freight charges now come to Rs40 per bag.
The coal price is now Rs$110 per ton, which translates into Rs85 per 50 kg bag for plants producing cement in Northern Areas and Rs75 per bag for plants in Southern region.
Four months back the coal rate was $75 per ton. The price of paper bag used in packing comes to Rs15.50 per bag.
He said that these figures reveal the cost of production of cement is high and as a result, some five to six units have already closed their production in the last 3-4 months.
The APCMA official said the exports were also likely to range between 11-12 million tons in 2009-10. He said due to economic slowdown, cement exporters are fetching $48-52 per ton on exports of bagged cement as compared to $60-70 per ton last year.
On loose cement, exporters are getting average price of $40 per ton as against $52 last year. The rate of cement in world markets has come down after financial crunch.
Besides, exports of cement went up in quantity to 7.328 million tons in July-Feb 2009-10 as compared to 6.686 million tons in the corresponding period of last year.
The official said the cement exports fetched around $800-850 million last fiscal but this fiscal, it may hover between $600-650 million.
Meanwhile, APCMA Chairman Brig (rtd) Asmatullah Khan Niazi said freight proposals have been approved by the government on association’s demand.
However, the proposals submitted to the commerce ministry suggested that freight subsidy should be given to all units irrespective of the fact whether they are located within 100 km of the port or not.
He said the subsidy was proposed to be given at a percentage of the cost of freight from the manufacturing unit to the port. The government suggestion to exclude factories within a 100 km of the port is, therefore, not in line with the proposals submitted by APCMA.
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