The Hindu Business Line : Imported cement may not be cheaper

Sudden spurt
Prices ruling at Rs 215 per 50-kg bag in Pakistan
‘Transportation by sea is a better option’
BIS certification is for one year

Suresh P. Iyengar

Mumbai, Aug 28 Even as two Pakistani cement companies have obtained Bureau of Indian Standards (BIS) certification to export to India, prices in northern parts of Pakistan have jumped by Rs 20 to Rs 215 per 50-kg bag.

“The prices in northern areas of Pakistan, including Punjab, have risen to Rs 215 from Rs 195 last week after BIS issued certificates to two cement majors in Pakistan,” said a dealer, who is negotiating with a Pakistani firm for cement import.

Dealers in India are not too optimistic about imports, though they concede that the landing cost (f.o.b.) at the ports would be $85-90 a tonne (Rs 3,485-3,690), depending on the quantity of the order to import.

“If you add storage, labour, transportation and marketing charges it may just be on par or slightly higher than domestic prices,” said an analyst, adding that acceptability among users was also a major concern.

The average cement prices in India are Rs 4,800 a tonne.

Analysts also said that transportation by sea is a better option, but added that very few ports in India are equipped to handle large cement consignments.

Last week, the BIS certified Lahore-based Lucky Cement and Maple Leaf, while DG Khan, Bestway, Pakistan Cement, Zeal Pak, Pioneer and Fauji Cement are expected to get licences soon.

The BIS certification is for one year. Earlier, BIS had issued an in-principle approval to these companies for a five-month period.

In July, Lucky Cement exported 1.58 lakh tonnes, according to industry data.

Lucky also plans to issue global depository receipts to raise funds for capacity enhancement to 2.5 million tonnes a year by building two additional lines in Karachi.

According to estimates, Pakistan has a capacity to produce about 34 million tonnes (mt) a year and is set to increase it to 40 mt by April.

Domestic demand there is about 22 mt, thereby generating a surplus of 10-12 mt.

Pakistan cement industries are equipped to ship 8,000-10,000 tonnes a day to India.

“Cement prices continue to be stable in India . Our interaction with cement dealers leads us to believe that while there are no concerns on the demand front, cement players are unlikely to raise prices further during the monsoon,” said Mr Novonil Guha, Senior Research Analyst, Prabhudas Lilladher.