Cement-makers reluctant to cut prices

[Naveed Yaseen]

KARACHI: The cement cartel is reluctant to reduce prices even after a decline in international coal prices.

M Rehan Khan of First Capital Equities Ltd (FCEL) Research said: “Cement manufacturers can easily reduce prices from Rs20 to Rs25 per 50kg bag without affecting their profits.”

Price reduction in the current low demand would not help cement manufacturers as various public and private projects are at a standstill in the country, industry officials believe.

A few days ago, Lucky Cement, one of the leading cement manufacturers, reduced the price by Rs50 per bag, but it raised the price again on Thursday on the back of pressure from other manufacturers.

Now its 50kg bag has again come back to the level of Rs330 to Rs335. Lucky Cement, one of the leading cement exporters, reduced prices to get more market share for its recent production line while starting operating a month back in Nooriabad, Karachi.

Meanwhile, cement dealers in Karachi took this opportunity and buy substantial lucky brands in last few days. Cement manufacturers had raised the commodity’s price by about Rs100 per 50 kg bag in the first quarter of calendar year 2008 owing to the rising coal prices that hit peak $190 per ton in mid 2008. Since then, international coal prices start declining and now come back to the range of $120 to $130 per ton.

Local cement demand has remained low in last 3 quarters unlike cement exports that maintain healthy outlook, similarly, cement exports are likely to remain buoyant in last quarter of fiscal year 2008-09 but expected to decline in next fiscal year owing to the economic slowdown in the regional countries.

http://www.thenews.com.pk/daily_detail.asp?id=173991