LAHORE - Amidst constant hike in power tariff and petroleum products, the prices of cement in upcountry have fallen by Rs10-15 per 50kg bag to Rs 425-420 per bag during one week. Industry sources said that decrease in price is attributable to seasonal decline in dispatches owing to intense rainfalls in northern region hindering construction and transportation activities.

Experts said that cement prices in India also saw a correction during August and Sept 2012 and declined by Rs10-30/bag MoM across regions due to the onset of monsoons.

Industry sources said that average cement prices in northern region during same period last year were also slashed by Rs10/bag to Rs410/bag owing to heavy rainfalls. However, prices were again reverted back to Rs420/bag on account of robust demand in Oct, as the local north dispatches were up by 33 per cent MoM in this month of last year. They s aid the cement was available in surplus and the industrialists want to increase their liquidity by selling the commodity. They, however, said the decline in price was for short term and it would revert back soon because jump in cost of production.

Industry sources informed that cement industry has not yet passed on the impact of recent increases in input prices of electricity, gypsum, devaluation of Pak rupee and transportation of goods from Karachi by any unit in the North zone due to severely depressed demand.

Energy, which constitutes more than 60 per cent cost of production, has taken a quantum jump in a couple of years, making the production cost almost double. Government through its power distribution companies is charging fuel price adjustment and impact of this adjustment is Rs10-12 per bag which is not yet passed on by the industry.

Experts said that cement prices in India also saw a correction during August and Sept 2012 and declined by Rs10-30/bag MoM across regions due to the onset of monsoons. The northern and eastern regions saw a decline of Rs15-20 bag MoM, which took average price in the North to Rs283/bag in August 2012 and to Rs320/bag in the east. The south and west regions saw a decline of Rs10-12/bag MoM except Hyderabad where prices corrected by Rs32/bag MoM. All-India average cement prices stood at Rs292/bag, a decline of Rs12/bag MoM.

On a YoY basis, prices are still higher by Rs50/bag, driven by an increase in freight and raw material costs. Prices in the northern region have declined by Rs15-20/bag after picking up in the monsoon season. Prices declined by Rs15/bag in Delhi and Jaipur and stood atRs280/bag and Rs270/bag, respectively, while they declined by Rs20/bag in Amritsar to Rs300/bag in August 2012. On a YoY basis, prices in the region were still higher by Rs35-50/bag, mainly on account of a hike in prices by producers after an increase in input costs like freight and raw material cost. According to discussion with dealers, cement prices are likely to correct further and expected to remain subdued till Oct 2012 on account of the onset of the monsoon season. Cement industry in India has also reported muted dispatch numbers in Aug 2012. Aggregate dispatches have declined 5per cent YoY.