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Karachi, February 24, 2014 (PPI-OT): Cement prices increased by Rs 15/bag Positive for north zone sector
Boom in the construction industry urged cement makers to increase the cement prices by Rs 15/ bag this month anticipating higher local demand ahead as reported by Dawn newspaper the other day.
According to Standard Capital, they see that local cement demand to boost before monsoon season due to expected mega construction projects including 100 housing projects mainly high-rise apartments this year.
Market statistics
As per the market analysis new price hike pushed LUCK prices which could be around Rs540/bag and ACPL Falcon brand retail price is now at Rs 560/bag.
During FY14 Standard Capital has observe a continuously raising of cement prices by Rs 5 to Rs 15 per 50kg bag which was made by the cement dealers. As per market statistics a cement bag of well known brand was priced at Rs 460 in June 2013 which currently priced at around Rs 530 – 540.
During 7MFY14 local cement sales rose to 14.14mn tonnes as compared to 13.85mn tonnes in same period last fiscal year. And this construction boom in this quarter will add addition volumetric sales generated from local demand in both South and North regions.
Margins to bloat:
With rising selling price of 50kg cement bag Standard Capital expects that gross margins for cement players to expand during this reporting year which is already observed in half yearly results of few manufacturers. Standard Capital expects that earning to spur for cement companies.
Exports to neighbouring countries to increase:
Recent dialogue with the neighbouring country to improve bilateral trade can provide a hassle free platform for the cement countries to raise their export volume beyond 1mn tons, making it the main tradable item. This expected boom in export sales would also enable the companies especially DGKC to attain increased profitability.