KARACHI: The month of May proved to be a good one for all cement manufacturers as local sales jumped 41 per cent in spite of the long Eid-ul-Fitr holidays and price increase by manufacturers in the North region.

Following a Rs10 per 50kg bag jump on May 29, the Northern region cement makers further raised price by Rs5 on June 4, taking the average price to Rs609 per 50kg bag. Currently, the 50kg cement bag in North zone is priced between Rs610-615.

Shankar Talreja of Topline Securities said the average cement bag price in North was Rs514 per 50kg bag on July 1. “North-based mills lowered the prices one-and-a-half years ago but now they are going for an increase. Coal price is now tagged at $108 per tonne which was $54.3 per tonne on July 1 last year,” he said.

“However, cement prices in Southern region did not witness any significant jump as the manufacturers have now lowered the prices, like Northern region in the past,” Mr Tarleja added.

As per data released by All Pakistan Cement Manufacturers Association (APCMA), cement sector showed excellent growth of 49.86 per cent in May 2021. Total cement dispatches during May were 3.947 million tonnes as compared to 2.634m tonnes during the same month in the previous fiscal year.

Domestic cement dispatches during May increased to 3.201m tonnes from 2.271m tonnes in same month in FY20. Exports massively rose by 105.56pc – from 363,174 tonnes in May 2020 to 746,550 tonnes last month.

During May, North-based cement mills dispatched 2.713m tonnes in the local markets, up by 35.55pc from 2.001m tonnes in the same period last year. Exports from North-based mills were just 7,520 tonnes in May 2020 which surged to 203,625 tonnes last month.

Meanwhile, South-based mills sold 487,311 tonnes in domestic markets during May, registering a robust jump of 81pc compared to 269,003 tonnes in the same period last year. Exports from South also posted a growth of 53pc to 542,925 tonnes in May 2021 from 355,654 tonnes during the same month last year.

During July-May 2020-21 (11MFY21), total cement dispatches (domestic and exports) grew by 21pc to 52.222m tonnes versus 43.189m tonnes during the corresponding period of last fiscal year.

Local despatches rose by 20.26pc to 43.451m tonnes in 11MFY21 from 36.13m tonnes in the same period last fiscal year. Exports increased from 7.059m tonnes during 11MFY20 to 8.771m tonnes during the same period on FY21 – up 24.25pc.

North-based mills despatched 36.722m tonnes during 11MFY21 for domestic consumption that was 18.67pc higher compared to the same period last fiscal year that stood at 30.943m tonnes. Exports from North were 2.365m tonnes, showing a rise of 23pc over exports of 1.924m tonnes during the same period of last fiscal year.

Local dispatches from South-based mills were 6.729m tonnes in 11MFY21 – up 30pc from 5.187m tonnes during the corresponding period of FY20. Exports from South recorded a 25pc jump to 6.406m tonnes in 11MFY21 compared to 5.135m tonnes during the same period last fiscal year.

The APCMA spokesman said coal prices are showing significant upward trend as the C&F cost has increased from around $60 per tonne to around $120 per tonne during FY21. This has increased the cost of doing business as presently coal and pet coke are being used as fuel/raw material for various manufacturing concerns, he added.

The cement industry is subject to federal excise duty of Rs1,500 per tonne and general sales tax (GST) of 17pc of maximum retail price and these taxes calculate to around Rs170 per bag. Besides FED, the industry also pays Customs duty and taxes on machinery, spare parts imports and on import of coal and pet coke, he said.

The spokesman urged the government to abolish the FED and reduce other duties and taxes in order to provide opportunity to the manufacturers to control their cost of production and further optimise/expand their plant that would in turn help generate more employment and revenues for the government.

Steel bar makers halt bookings

Meanwhile, some steel bar manufacturers have stopped taking new booking orders. A builder said that Agha Steel Industries had informed its clients regarding closure of new order booking from June 1.

He said some other builders had also followed suit perhaps to either increase the prices of steel bars ahead of the budget or wait for any announcement regarding duties and taxes in the upcoming budget.

Steel bar makers had increased the price in mid-May by Rs5,000 per tonne to Rs142,500-143,500 due to unexpected surge in international scrap prices.

Contrary to this, the average per tonne import price of iron and steel scrap has declined to $379 per tonne in 10 months of the ongoing fiscal year (10MFY21) from $389 per tonne in the same period last fiscal year. Total iron and steel scrap imports in 10MFY21 stood higher at 4.154m tonnes, valuing $1.55bn as compared to 3.319m tonnes costing $1.293bn in the same period in FY20.

Published in Dawn, June 6th, 2021