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Constructing a house to cost more as cement prices increase

SAMAA | - Posted: Jun 7, 2019 | Last Updated: 1 year ago
Posted: Jun 7, 2019 | Last Updated: 1 year ago
Constructing a house to cost more as cement prices increase

If you are planning to renovate your house or construct a new one, you will be paying more as cement makers have just increased prices and dealers are likely to follow suit.

Karachi-based cement brands, such as Power, Lucky and DG Khan to name a few, have increased prices of a 50 kilogramme bag by Rs25. Following the increase, the Rs635 bag is selling for Rs700, Noman Ali Khan, a cement dealer from Landhi No 4 confirmed to SAMAA Digital.

The increase comes after the Motorway Police imposed restrictions on cargo trucks commuting on the Karachi-Hyderabad Motorway (M9). The police reduced the weight a cargo truck can carry from 40 tons to 17.5 tons, according pamphlets distributed on the highway two months ago. The purpose was to ensure durability of the newly built motorway, Khan said.

However, the price increase also takes into account the surge in oil prices, which makes it more expensive to transport cement to the city. The government, on May 31, increased the price of high speed diesel to Rs126.82 per liter, up by Rs4.5 from last month’s Rs122.32 per liter.

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“We have no option but to increase cement prices accordingly,” Khan said, adding they will now, by selling a 50kg bag of cement for Rs700 after raising its price by Rs30.

This steep rise in cement prices is not normal, but Khan says recent developments have increased their costs significantly. “We will spend more on transporting cement, but carry less than half the amount we were previously allowed.”

Under the new law, a truck that was allowed to carry 800 bags will now be restricted to 350 bags, which significantly increases transportation cost per bag of cement. The higher diesel price makes it a double whammy.

This price hike isn’t limited to cement —  other raw materials like bricks and gravel will also become expensive and dealers estimate a machine-made block of Rs27 will now cost Rs35 to Rs40. Since bulk of the gravel is also transported into the city via the M9, its cost will also increase.

In case you may not have guessed it already, the weight restrictions will apply on all cargo trucks, not just those carrying cement and gravel. Yes, the rice from Punjab’s Muridke or sugar from Badin’s factories will also become more expensive.

Related: Dollar rate rises after fluctuations in the market

Inflation for the month of May was recorded at 9.1% compared to the same month of 2018. The data showed a notable increase in prices of gas, onions, tomatoes, garlic, pulses, petrol, diesel and CNG. The rise in the dollar, which jumped from Rs142 at the start of May to Rs153.5 before falling back to Rs149, and the increase in electricity, gas and oil (petrol and diesel) prices have all contributed to higher inflation last month.

The latest increase in oil prices didn’t reflect in the inflation data and is likely to cause a further hike in prices this month.

Sources in the transportation industry (goods carriers) say the restriction on cargo trucks will not only hurt their business but unleash a storm of inflation as everything will become expensive.

Though cement makers have increased prices, the new law has not come into force yet as negotiations between truck owners’ association and the police are under way.

“If restrictions on cargo trucks are applied as announced, truck owners will go on strike because it will not be acceptable to them,” said Khan who is in contact with truck owners.

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lucky cement, cement, construction, houses, pakistan house, m9 motorway, karachi, hyderabad
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