Cement manufacturers in the northern region of the country on Thursday announced an unprecedented increase in the price of each bag of cement, with the surge reaching up to Rs60.
Citing escalating freight costs as the primary reason behind this decision, industry insiders suggest that these price hikes could have a cascading effect on the entire sector.
New regulations impacting raw material transport
The recent introduction of government regulations, restricting the maximum quantity that trucks can carry on national highways, has triggered a domino effect on the transport costs for raw materials.
In response, cement manufacturers have opted to pass on the financial burden to local consumers, leaving them to bear the brunt of the rising costs.
Anticipating a ripple effect, industry analysts suggest that producers in the southern region are likely to follow suit in the coming days, further intensifying the pricing turmoil in the cement sector.
Price hikes exceed freight cost increase
A report by Alfalah Securities has highlighted that the increase in prices surpasses the actual rise in freight costs, presenting the industry with an opportunity to maximize profits.
The diverse fuel mixes utilized by various manufacturers add complexity to the situation. Producers situated in the mid-country are expected to face more adverse consequences as their freight costs are projected to increase more drastically.
In contrast, producers in the northern region, relying on local sources such as Darra Adam Khel and Chakwal, are poised to benefit from lower freight charges.
