After hitting its record peak during the first week of December 2023—standing tall at Rs1244 per 50-kg bag—the average cement price across Pakistan is gradually tapering off. In the eight weeks following that cold winter spell, cement prices have dipped by Rs35. Some markets such as Islamabad hit their peak earlier—in late Nov-23—having now declined by nearly Rs63 Lahore whose prices have dropped Rs90 compared to its peak. Markets in the south, however, are holding on to their reins of peak pricing tighter still. Nowhere near any major lows though, prices are certainly loosening up which may sound off warning bells down the low-burning cement kilns.

Encouragingly for cement manufacturers though, this may not be as damaging for the handful of companies that are procuring coal from multiple sources, including from abroad where prices have slid down significantly. Richards Bay coal prices are currently matching lows observed during the pandemic that fell prey to energy demand across the world screeching to a halt. But at the heels of the pandemic itself, coal prices took off as the Russian-Ukraine crisis came to a head. When they were at their all-time highs, cement manufacturers here at home began to tune their facilities to utilize Afghan and domestically sourced coal to meet their energy needs. Since then, however, prices have started softening allowing companies to begin importing from abroad again. Current coal prices provide further reassurances that costs can be kept at bay.

This is important too; with construction demand yawningly low across markets, and capacity utilization for industry players sliding lower than 60 percent, it was strong pricing power that allowed cement companies to turn solid profits in the past quarters. Expectations are that during the first and second quarters, profits for cement companies have soared considerably. If cement prices continue to lose momentum, companies will have to optimize costs, where coal becomes even more relevant as grid power and gas become costlier. While cement prices are not falling at quite the same pace as they were climbing, steady and slow may turn the tide after all if demand continues to remain sluggish.

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KU Feb 06, 2024 12:52pm
For Pakistan climate change is already spelling doom for agriculture and socio-economic upheaval. Coal pollution includes sulphur dioxide, nitrogen oxides, other heavy metals, can we afford this?
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Tariq Qurashi Feb 06, 2024 03:24pm
Solar is the solution, not coal.
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