November 30, 2023 (MLN): The cement manufacturers in the northern region have increased the price of each bag of cement by up to Rs60, citing a surge in freight costs.
The government has recently introduced regulations restricting the maximum quantity that trucks can carry on their axles when traveling on national highways.
As a result, the transport costs for raw materials for the manufacturers have increased and they have passed on the effect to the local consumers.
Producers in the south are also likely to follow these price hikes in the coming days.
According to a report by Alfalah Securities, this hike in prices stands more than the actual increase in freight costs, thus benefiting the industry by providing them a route to book more profits.
As various manufacturers utilize diverse fuel mixes, the introduction of this new restriction will have a broad range of effects.
Producers situated in the mid-country would face many adverse consequences as their freight costs would increase more drastically.
While producers in the north region, that are dependent on local sources will be in proximity to two primary coal sources, namely Darra Adam Khel and Chakwal and will incur lower freight charges.
As south-based producers rely on local coal that originates in Balochistan, they will have to bear higher transportation expenses.
The report further mentions that the price of Afghan coal has also surged by PKR3,000/Ton in the past month as freight from the South has increased and dealers have increased Northern origin coal prices as well to maintain pricing parity with imported coal.
