Lahore: In a significant move that could impact cement prices regionally, the Punjab government has revised the royalty rates on limestone, a key component in cement production. The new rate has been set at 6% of the ex-factory sales price of cement or clinker, marking a substantial increase from the previous flat rate.

According to AKD Securities Limited, this revision in royalty rates by the Minerals and Mines Department of Punjab is expected to raise the cost of limestone per bag of cement to PKR 55, up from PKR 19. As a result, cement prices in the region are projected to increase to PKR 1,560 per bag from PKR 1,510.

The analysis suggests that cement manufacturers with operations outside Punjab might benefit if they adjust their prices in line with the increase in Punjab. Conversely, those operating primarily within Punjab might face negative earnings impacts if they choose not to pass on these cost increases to consumers.

The outlook for the cement sector remains bullish despite potential challenges. AKD Securities anticipates that other provinces may follow Punjab's lead, potentially leading to a nationwide increase in cement prices. However, sustained gross margins and easing monetary policies are expected to continue supporting the sector.