However, spokesman of the All Pakistan Cement Manufacturers Association (Apcama) refused to comment on it, saying 'only Chairman APCMA, General Rahmat Khan (Retd) can throw light on the current infighting among the manufacturers,' however, he declined to provide his contact number.
Expressing a pleasant surprise over the drop of cement prices by Rs 125 per 50 kg bag in a short period, cement stockists in Lahore said, 'if the manufacturers can afford to sell their product at such a low price, then there would be no justification for selling it at such a high cost.
They further said, 'in case the cement manufacturers maintain this price of Rs 245 to Rs 250 per bag it would give a tremendous boost to the stagnant housing and construction sector and to curtail unemployment. At one cement outlet on Multan Road, a happy house builder, MD Malik booked 200 bags of Bestway cement thinking that cement might not be available at this rate after some days.
A former senior vice president, Lahore Chamber of Commerce and Industry (LCCI) Sohail Lashari, said that the LCCI has been impressing upon the cement manufacturers to break their cartel and bring down prices of cement as it has direct impact on 22 other industries.
He said that the rationalisation and decline of cement prices is a good omen for the nation as it can boost the housing and construction sectors and also provide jobs to the vast uneducated and semiskilled labour force. A Lahore based cement exporter and insider of the cement industry said though sale of cement declines in monsoon season, yet there is no doubt that there was a 'pooling among the manufacturers and they had distributed areas among themselves for supply of their cement.
'Recently Maple Leaf and Bestway cement have intruded in each others' allocated supply areas in Lahore with large quantities of cement and the stiff competition between the two has brought down prices of cement in the province. It may be recalled that the Competition Commission of Pakistan (CCP) had served show cause notices on 21 cement manufactures and the APCMA against the alleged cartelisation for en masse increase in cement prices in October last year under Competition Ordinance 2007.
The APCMA got a stay order against the show cause notices, which was vacated by the defunct Islamabad High Court (IHC) on 29th of the last month allowing the CCP to further proceed against the cement manufacturers. Meanwhile, after the dissolution of the IHC on July 31, 2009 the APCMA approached the Lahore High Court (LHC), seeking stay order against the CCP legal action.
The Court allowed the CCP to complete its proceedings against the cement manufacturers, but it should not pass any adverse order till disposal of the petition in the Court. Chairman CCP, Khalid Mirza, told Business Recorder here on Monday that the CCP completed its hearing on August 12, 2009 against the alleged certelisation of the cement manufacturers involved in the price hike of the commodity. He said that in pursuance of the High Court direction, the CCP has withheld its decision.
The market players were already expecting fall of the cement prices from July I, after reduction of excise duty from Rs 900 to Rs 700 per tonne, a relief of Rs 200 per tonne, and a cut in the Public Sector Development Programme to just PKR 219 billion owing to which domestic cement consumption has dropped sharply.
It may be added that the cement industry is the fastest growing industry of Pakistan and despite being affected by the global economic crisis it managed to boost exports to $750 million in fiscal year 2008-09. It hopes to export cement worth $1 billion during the current FY 2009-10.
Pakistan has explored the markets of Afghanistan, Iraq, Sri Lanka, India and Sudan. The cement manufacturers are expecting more orders from Sri Lanka this year as the Lankan government wants to build infrastructure, which was destroyed in the civil war with Tamil Tigers. The cement industry is also hopeful that the cement consumption would also enhance manifold with the construction of Diamer Bhasha dam, Neelum-Jhelum hydropower project and many other national highways. The cement production capacity has increased to 42 million tonnes from 10 million tonnes in 2003-04 with huge investment of Rs 200 billion.
According to industry sources cement sales crossed 3 million tonnes in July, registering 15 per cent growth over dispatches of 2.6m tonnes made in July 2008. Local demand also seems to be strong as the country would embark upon the reconstruction activities in Swat and Malakand. Going forward industry analysts expect competition to stiffen, forcing some of the smaller and highly leveraged of the 21 listed cement companies to either merge or put themselves up for sale.