Karachi, May 25, 2012 (PPI-OT): Cement manufacturers have made another hike in cement prices of PkRs 10 per 50‐kg bag across the country after which the new ex-factory prices of Lucky Cement and Falcon Cement (brand of Attock Cement) have reached to PkRs 412.5 and PkRs 420 per bag respectively.
According to Alfalah Securities Limited, cement producers have linked the recent price hike with rising cost of production, claiming that an increase in power tariffs from PkRs 11.37 per unit to PkRs 12.37 during peak hours and from PkR 6.37 to PkR 7.46 per unit during off‐peak hours have compelled manufacturers to raise cement prices.
As per the announcement in Budget FY12, Federal Excise Duty (FED) on cements would be phased out gradually and was reduced by PkRs 200 per ton for the current fiscal year while, a reduction of PkRs 250 per ton would be made in the next two budgets. Moreover, the international coal prices have also dropped to ~USD 98 per ton, thus giving space to manufacturers to cut cement prices. Cement prices on the other hand have been on a continuous rise due to favourable demand and in the absence of a monitoring authority which could regulate the prevailing cartel in cement industry. High cement prices along with international coal prices on the lower side would result in increased profitability for cement manufacturers as local sales are expected to increase owing to measures taken by the government to build development projects ahead of the general elections in 2013. Alfalah Securities Limited recommends a “Hold” on LUCK at current levels.