September 29, 2017 at 1:05 pm #2143
This topic is about different construction materials discussion. Quality and quantity check along with latest prices.March 21, 2018 at 6:22 am #2656
Cement prices go up by Rs10 per bag in northern region
By Farhan ZaheerPublished: March 2, 2018
KARACHI: After deliberating for months, cement companies in the north have raised prices by Rs10 per bag, industry officials said on Thursday.
Rising cement demand in the region has given companies the confidence that demand will not be affected if prices are increased. In case the move does not affect sales, cement companies may go for a further increase in prices in the coming months.
“Cement companies wanted to pass on the impact of rising international coal prices to consumers for a while. Now they have decided to go on,” JS Research analyst Faizan Ahmed commented.
Most companies feel that this is the right time to raise prices as the winter season is ending and more people are going to opt for construction work, which results in higher cement demand in the market, he added.
After declining by Rs10 per bag in January 2018, cement prices in the northern region largely remained stable at an average of Rs505 per bag in February 2018.
However, with the recent hike of Rs10 per bag, cement prices in the region now stand at an average of Rs515 per bag. However, cement prices in the southern region remain unchanged and are unlikely to be raised in the near term with the average price already at a premium of 14% against its northern counterparts (average of Rs585 per bag), according to AKD Research report.
Cement prices in the north region declined by almost 11% or Rs60 per bag since June 2017, contrary to the south region where prices have so far remained stable.
Industry officials say cement companies in the north region were not able to increase prices because of a price war – a situation in which companies sell their products on a lower price to remain relevant in a competitive environment and keep market share intact.
Local cement demand was up 16-17% year on year in the first eight months (Jul-Feb) of the fiscal year 2017-18.
“Our discussion with manufacturers suggests that a further hike in prices cannot be ruled out in coming months due to robust cement demand,” Topline Securities reported on Thursday.
This development should alleviate investors’ concerns over pricing to some extent. To note, north producers have been selling cement at a discount of Rs20-30 per bag for some months now despite stellar local cement demand.
South African coal prices, after peaking at $98 per ton in fiscal year 2017-18 to date, have come down to about $93 per ton as of last closing. Future contracts from October 2018 onwards are trading below $90 per ton. Higher local prices coupled with softening coal futures should provide support to margins of cement manufacturers in future, the research report added.
Published in The Express Tribune, March 2nd, 2018.April 9, 2018 at 6:41 am #2749
Cement prices rise further as demand picks up
By Usman HanifPublished: April 4, 2018
KARACHI: Cement prices have gone up continuously in the country over the past three to four weeks apparently in the wake of pickup in development work ahead of general elections in the middle of this year.
Prices have been increased by up to Rs60 per bag, including a rise of Rs10 in the past couple of days, according to market players.
Lahore recorded the largest increase of Rs50 to Rs60 that took the price of a cement bag to Rs590.
Cement prices traditionally stay low in the northern region compared to the southern areas, particularly Karachi, but currently the price gap has shrunk.
“An extraordinary price increase in Lahore is apparently due to development work ahead of general elections and may come down after two to three months,” said analyst Saqib Hussain Khan of Sherman Securities.
However, other industry watchers believe the price may not revert to previous levels as the market is facing price pressure.
“Hike in coal prices, rupee plunge of about 5% on March 20 and strong demand were the factors which led to this hike in cement prices,” commented Atif Zafar of JS Global Capital Limited.
Average prices across the country rose from Rs521 on February 26 to Rs543 on April 2 with average weekly increase of more than 0.7%, according to the weekly price update of Arif Habib Limited’s Investor Watch.
Rapid large-scale infrastructure development under the China-Pakistan Economic Corridor (CPEC) and hefty allocation for the Public Sector Development Programme have propelled cement demand in the domestic market.
Cement prices have swelled more than double since 2013 from Rs250 to Rs590 per bag, said Wali Bhai Patel, a Karachi-based cement dealer.
Pakistan’s cement production depended on exports for a long time, but for the past few years, domestic needs have provided a vital cushion on the back of improving macroeconomic indicators and expanding construction activities.
Dynamics of the cement market are changing fast in Pakistan as half a dozen companies are going through an expansionary phase with combined investment of over $1.5 billion.
Cherat Cement, Attock Cement, DG Khan Cement, Lucky Cement, Power Cement, Bestway Cement and others have unveiled their expansion plans and all these projects will come on line in the next couple of years.
Published in The Express Tribune, April 4th, 2018.April 9, 2018 at 6:53 am #2750
Construction costs up
Business Recorder RESEARCH APR 5TH, 2018
With a backlog of at least 12 million houses across the country, the demand for housing is on a consistent incline, and some estimates suggest, every year this shortage expands by 100,000 houses. Among other reasons, property price hikes and continually rising building and material costs have exacerbated this gap. And there doesn’t seem to be any slow-down either. Several domestic and international factors are coming into play in the cement and steel industries that will inflate construction prices going forward.
Let’s look at cement. The commodity is one of the flourishing industries in the country growing on the back of CPEC and infrastructure related development across the country. The sector’s LSM growth in 7MFY18 was 10 percent year on year while its domestic sales were up by 19 percent in 8MFY18. Despite falling exports, the sector reached 91 percent capacity utilization during the period and in some months, reached 99 percent utilization.
Earlier this year, cement prices had started to slide down particularly in the north because of Cherat Cement’s expansion, but they have started to revive back strongly now. In fact, the industry raised the prices by Rs10 per 50-kg bag in February, promising to follow up with additional price increases. Since, cement prices have climbed by Rs60 per bag. (Read “Cement’s recovering confidence”, March 8, 2018).
According to Pakistan Bureau of Statistics (PBS), the average price of a cement bag end of March was Rs543; against Rs548 this time last year. After the latest hike, this average may have gone further up. But more importantly, prices could continue to move in that direction.
As a rule, anything that is imported as finished product or is an input in manufacturing will be more expensive given the rupee devaluation. The rupee depreciation of 9 percent against dollar has automatically increased import costs. The cement sector imports coal as a major raw material that has itself seen a price hike globally. Together with the weakening rupee, the higher costs had to be passed onto the consumer, given that the industry is confident it won’t lose its market if it did. After all, there is no chance of the sector entering overcapacity stage since demand is growing, capacity utilization is at its optimum levels already and most of the expansions in the north have been temporarily put to a halt by order of the Supreme Court.
Another big contributor in building costs is steel. The local industry had been heavily lobbying for protection from imports for years. The industry filed an application with the National Tariff Commission (NTC) that finally came up with five-year anti-dumping levies on galvanized coils and cold rolled products last year, which was a win against Chinese dumping of cheap steel into the country.
However, the existing regulatory duty of 15 percent on all other steel imports from all other countries was also raised to 30 percent.
This essentially has allowed steel production to take off and steel prices to be comfortably stacked up by local players. In fact, Elixir Securities told in a note that Amreli Steel had raised steel bar prices by Rs3000 per ton to Rs98,000 per ton end of March. Per PBS, steel bar prices have gone up by 10 percent between March of this year and last. Subsequent price hikes are expected.
Meanwhile, imported steel could become even more expensive. With China expected to cut down production of steel by 20 percent over the next few years, demand may outpace supply leading to steel prices climbing globally. On the other hand, Trump’s latest steel tariffs which essentially closed the US market for steel importing business may lead to a supply glut across the rest of the world.
Some are fearing trade diversion which could pressure prices as well. Though here at home, measures like RDs are taken at a whim. Any major influx of cheaper steel into the country may result in an increase in that levy while remedial measures with the NTC can also be taken up, which are helpful if not expedient. Local players don’t seem very worried.
Copyright Business Recorder, 2018April 29, 2018 at 11:40 am #2790
No relief in federal budget for construction sector, says ABAD
By Staff Report – April 28, 2018
KARACHI: Association of Builders and Developers of Pakistan (ABAD) Chairman Arif Yousuf Jeewa has strongly rejected the Federal Budget 2018-19 announced by Federal Minister for Finance Miftah Ismail on Friday and alleged that the government wants to destroy a very important sector of the economy by totally ignoring the construction industry.
In a strongly worded statement, ABAD chairman said that the government has presented a purely political and election budget, which will force the upcoming government to announce supplementary budget just after four months. He said that the construction sector is a very important sector for the betterment of national economy but the government even did not care to announce a clear construction policy, which will have a bad impact on the national economy in the long run as with the closure of construction industry more than 70 allied industries will all suffer badly creating mass unemployment.
He lamented that regulatory duties (RD) on the import of steel bars, sanitary wares and tiles have not been withdrawn despite repeated requests by ABAD to the government that manufacturers of these materials are wrongly interpreting regulatory duties for their own interests by increasing rates on the pretext of the imposition of RD. Steel manufacturers, he continued, increased the rate of steel bars from Rs68,000 per tonne to Rs98,000 per tonne after imposition of the regulatory duty on it. Moreover, with the imposition of sales tax on electricity by Rs2.5 per unit from the government, steel bars are being sold at the rate of Rs102,000 per tonne. On the other hand, cement manufacturers have also raised Rs20 per bag of 50 kg cement despite the fact that the government had raised Rs13 per 50 kg bag of cement as excise duty.
The cost of construction has increased due to immoral acts of such manufacturers, he said adding that at present Pakistan is facing a shortage of 12 million housing units and this shortage will increase manifold due to unjustifiable policies of the government as people from middle class also will not be able to purchase their dream houses.
Arif Jeewa said that ABAD, prior to the budget, had proposed to the federal government to sit with provincial governments for doing away with three-tier property valuation and adopt a single property valuation system throughout the country and fix one per cent unified tax for the property transaction. Instead of providing relief to the construction sector, the government has put in abeyance the unified tax on property transaction by saying that provincial governments also should follow the federal government in this regard but has not taken concrete steps to implement it.
He said that ABAD had given budget proposals to Prime Minister Shahid Khaqan Abbasi, Finance Minister Miftah Ismail and other concerned authorities for the betterment of construction industry but no relief has been provided in the budget, which could be considered detrimental for the construction industry. ABAB had proposed that overseas Pakistanis be given leverage in the Tax Amnesty Scheme for construction or purchase of the first-ever home without asking the source of income but the government has not included this proposal into the budget, he added.
ABAD chairman announced that ABAD will adopt a future course of action, in an emergency meeting, which is called for deliberation on issues raised regarding construction sector after the announcement of the federal budget.
Cc: Pakistan todayMay 10, 2018 at 12:43 pm #2805
Bestway, DG Khan Cement companies escape harsh penalty
By Monitoring Report – May 10, 2018
KARACHI: The Supreme Court’s decision on Pakistan’s cement companies as a positive outcome, saying that contrary to market expectations, Bestway Cement Co and DG Khan Cement seemed to have escaped a harsher penalty.
The comments come after the country’s top court ruled that Bestway Cement and DG Khan Cement will find an alternate source of water. The two companies also deposited Rs2 billion as the security deposit, and agreed to pay for the water they use from now on, reports a national daily.
However, they have been given six months to find an alternate to Katas Raj pond that has nearly dried up due to heavy consumption by these companies.
The market was expecting a penalty for the water these companies have already consumed last year, said an analyst.
“The outcome is considered good for both companies,” said Sherman Securities analyst Saqib Hussain.
Hussain said the companies have resolved to establish a reservoir, which will be fed through a water pipeline from Jhelum River, approximately 60km away. The establishment of the new system will help companies meet their water requirements without affecting Katas Raj pond in Chakwal.
According to UBL Funds’ research analyst Anjali Rawlani, the companies must establish their alternate source of water in a six-month period.
The installation of the pipeline is expected to cost around Rs2 to 2.5 billion while establishing a reservoir similar to Katas Raj pond size would cost around Rs100-150 million. The pond occupies an area of around 15,000 square feet with a maximum depth of 20 feet.
Until the new target of establishing a reservoir is achieved, the companies would be paying Punjab government for the water they use.
Last year in November, the Supreme Court took notice of the drying up of Katas Raj Temple pond due to the extraction of a large amount of groundwater by nearby cement factories through a number of wells, which resulted in declining water levels.
Cement factories located in the vicinity of the pond are Bestway, DG Khan Cement, Gharibwal Cement and Dandot Cement. The first two fall in the red zone i.e. the area where cement factories are affecting the pond.
The Punjab government is yet to decide the tariff rate for water usage until an alternative is available.
Both DG Khan and Bestway will incur a one-time expense for six months. According to Hussain, if the companies are charged at Rs0.25 per liter as water conservancy charge as proposed by the Additional Advocate General Punjab in the court, then Bestway would have to pay Rs250 million, while DG Khan would be charged Rs175 million. This may reduce earnings for the two companies by a meagre 2% in FY19.
Cc: Pakistan TodayJuly 3, 2018 at 8:42 am #2898
Rupee devaluation pushes steel prices to record highs
By Monitoring Report – June 21, 2018
KARACHI: As the rupee continues its downward slide against the dollar, steel manufacturers have raised the prices to Rs100,000 per ton, the first time the prices have surpassed this mark.
Steel usage has been rising exponentially due to increased construction activity because of China-Pakistan Economic Corridor (CPEC).
As per Taurus Securities research analyst Hamdan Altaf, the most used steel G40 and G60 cost surpassed the Rs100,000 mark for the first time, reported Express Tribune.
Although, high-grade steel made on order could have sold above this price point before and the steel mentioned above was selling between Rs97,000-98,000 per ton.
The input of steel production is contingent on imports of raw material which also is susceptible to the value of the greenback in Pakistan.
Due to continuing depreciation of the rupee against the greenback in inter-bank and kerb market, the rise in steel prices was expected.
Mr Altaf said due to massive demand from the construction sector, the price hike isn’t going to impact sales.
Association of Builders and Development (ABAD) Senior Vice President Fayyaz Ilyas said demand would be unaffected, however, the lower-middle and middle-class segment would get hit.
ABAD SVP shared prices of cost-sensitive economic housing projects would be hiked, greatly impacting lower-middle and middle-income groups.
Mr Ilyas added aside from the rupee devaluation, the government had also enacted additional regulatory duties on import of raw material, which raised input prices in the construction sector.
Pakistan’s steel industry comprises of a complete and a closely intertwined value chain – from pig iron furnaces to downstream sectors and end-user industries.
Cc: Pakistan today
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