Displaying items by tag: Price
Filipino government to investigate cement price rises
09 April 2013Philippines: The National Price Coordinating Council (NPCC) in the Philippines announced on 8 April 2013 that it was concerned about rising prices for cement.
"We will be sending letters to cement producers to ask them why their prices have gone up," said Trade Undersecretary Zenaida C Maglaya in a briefing after a meeting of the NPCC. "We have to ask them the reason because it may be that they consumed more coal, which went up (in price), but there might be another reason." She added that the firms have to send in their reports within the week.
The Trade department also reported that it was investigating Eagle Cement for increasing its prices after it had agreed earlier with the government to sell lower-priced cement. The firm was granted tax perks by the government for its Bulacan cement plant in November 2006.
Egyptian parliament suggests fixed price for cement
15 March 2013Egypt: The Shura Council's housing committee, in Egypt's upper house of parliament, has suggested imposing mandatory pricing for the country's cement firms. The move follows recent rises in cement price of up to 25%.
"The Egyptian Competition Authority will be tasked with setting the price if the government approves the Shura Council's recommendation," said Atef Yacub, the head of Egypt's Consumer Protection Agency, to Al Ahramonline. He explained that the 'unjustified increase in cement prices' is the main reason behind the suggestion of the mandatory pricing. Yacub dismissed suggestions that energy price rises were solely responsible for the rises in overall cement prices.
In February 2013 the Egyptian government said that the price of fuel oil, which is widely used in energy-intensive local industries such as cement, would be increased by 50% to US$220/t.
Mozambique investigate ‘dramatic’ rise in the price of cement
17 October 2012Mozambique: The Mozambican government's National Economic Activities Inspectorate (INAE) is investigating cement wholesalers and retailers in the northern province of Nampula, after recent dramatic increases in the price of cement. The move is attempting to halt the hoarding of cement and its subsequent resale at speculative prices on the informal market.
The investigation is examining why a 50kg sack of cement produced at a plant in Nacala is being resold at a 66% mark-up in the provincial capital of Nampula city. A government decree from November 2011 fixed the maximum profit margin at 12% for wholesalers and 25% for retailers.
However, wholesalers and retailers in Nampula have claimed that the prices cited by the INAE are unrealistic because of the high transport costs involved in moving cement from Nacala to Nampula. According to the wholesalers and retailers, waiting times in Nacala also contribute to the cost. Trucks sometimes wait outside the cement factory for seven days before they are loaded, suggesting that the plant in Nacala is unable to cope with the demand.
Nacala has two cement plants but only one supplies the market. The other sells its cement directly to the contractors building major public works in the Nampula province.
India fines cement firms US$1.1bn over cartel
22 June 2012India: In one of the largest fines of its kind, India's antitrust body has imposed a penalty of a combined US$1.1bn on 11 cement companies for price fixing. The companies penalised by the Competition Commission of India (CCI) include ACC and Ambuja Cements (both units of Swiss cement-maker Holcim), UltraTech Cement, Jaiprakash Associates, India Cements, Madras Cements and the local unit of France's Lafarge.
"The commission has found that the cement companies have not utilised the available capacity, so as to reduce supplies and raise prices in times of higher demand," said the CCI in its judgement. It said that the penalty on each company amounted to 50% of their profit for the financial years 2009-10 and 2010-11.
ACC has been fined US$201m and Ambuja has to pay US$204m. India's largest producer of the building material, Ultratech Cement, has to pay US$206m, while Lafarge's Indian unit will have to shell out US$84m. Jaiprakash Associates has been fined US$232m.
On 21 June 2012 the CCI said that the cement companies' action of limiting supplies to the market through an 'anti-competitive agreement' was not only detrimental to consumers but also to the economy, as the building material is a critical input for infrastructure projects. The regulator asked the companies to pay the fine within 90 days. The companies can challenge the regulator's orders in the Competition Appellate Tribunal, a quasi-judicial body and can then appeal to India's Supreme Court.
In response UltraTech said that it hasn't indulged in any cartelisation and that it would appeal against the order in the appellate tribunal. In Zurich Holcim said it would, "contest the allegations and findings against (ACC and Ambuja) in the order and will pursue all available legal steps to defend their respective positions." In Paris Lafarge said, "We will see the detailed report and decide the suitable actions to take. Lafarge has a strict policy to comply with competition laws."
The CCI started accepting cases in 2009, replacing a relatively toothless antitrust body that had been in place since 1970, and has been becoming increasingly assertive. The biggest penalty it had imposed so far was in 2011, when it ordered DLF Ltd., India's biggest property developer by sales, to pay US$120m for abusing its dominant market position by changing agreements signed with some property buyers.
The judgement comes at a bad time for cement companies, as demand for construction materials is weak due to sluggish economic growth and a fall in spending on infrastructure projects. The cost of raw materials such as coal is on the rise as well, pressuring margins.
Indian cement prices down in May 2012
30 May 2012India: Indian cement companies have slashed their prices in May 2012 due to poor demand, event before the monsoon season has started.
Prices declined in all regions, except the south and central regions of the country, where prices have been stable. Demand has slowed, compared with April 2012 levels. Most dealers in India expect prices to decline after mid-June 2012, said Jaspreet Singh Arora an analyst at Anand Rathi.
Vinita Singhania, managing director JK Lakshmi Cement, said that demand in April 2012 has gone 'absolutely haywire' due to a slowdown in construction activities and certain infrastructure projects not being implemented. A senior official of the Indian Cement Manufacturers' Association said that in 2012 cement prices have declined even before the arrival of monsoon due to oversupply. "The price correction has come a little earlier than expected because demand didn't pick up in line with our expectations," the official said.
Philippines prices rise in response to fuel increases
29 March 2012Philippines: Cement producers in the Philippines are raising their prices, as increases in fuel prices have not shown any sign of abating and the peak of the construction season is starting.
Trade and Industry Undersecretary for Consumer Welfare Zenaida C Maglaya said, that based on the Price Monitoring report released on Friday 23 March 2012, prices of two brands of cement Republic (Lafarge) and Rizal (Cemex) had increased. However, the price of Holcim Philippines Inc. dropped by 2.5% from February to March 2012. In June 2011 Holcim raised its prices by 6% in Luzon. The three global firms dominate the Philippine industry.
Cost of power and coal accounts for 40% of a cement company's total production expenses in the Philippines. Most of the cement firms source their coal supply from Semirara Coal Corp. Construction activities are higher during the summer months, normally starting early in the year and peaking in May.
Construction activity was fuelled by private sector spending in 2011, as the government did not spend much on infrastructure projects. However the Aquino administration has started accelerating investments and implementation of major infrastructure projects in 2012. Both infrastructure and private sector investments in property developments, including housing and commercial establishments, are expected to boost demand for construction materials, including cement.
Prices set to rise amidst mixed Indian Union Budget
21 March 2012India: The Union Budget for 2012-13 has divided the cement industry on the likely impact of its new measures. An increase in excise and service tax is expected to increase the price for consumers, whilst an expected demand increase for cement will be driven by housing and infrastructure development.
Finance Minister Pranab Mukherjee proposed to exempt imported non-coking coal from the current basic duty of 5%. It is anticipated that this will have a positive impact of 1-1.5% on the industry's operating profit. The cement industry is the third largest consumer of coal after power and metallurgy, requiring about 15-20Mt/yr. At present, the industry meets close to one-fourth of its total coal requirement through imported coal.
Cutting the duty on imported non-coking coal has been offset by an increased excise and service tax of 2%. This hike in excise duty is expected to increase the cost of cement for consumers as manufacturers pass on the impact. One positive feature is the 30% abatement on the retail sale price, a long pending demand of the industry.
Meanwhile on the demand side the measures set to encourage housing and infrastructure development are expected to boost sales.
Overall opinions on the Union Budget have remained neutral for the cement industry, as the increase in excise duty combined with the recent increase in the cost of rail freight will result in a considerable increase in the cost of delivered cement. This will then impact upon the cost of construction. Although welcome the 30% abatement of the retail sale price will also pose some practical difficulties as the sales price changes with different markets.
Tanzania’s producers urged to hold prices
14 March 2012Tanzania: The Tanzanian government has urged cement producers to establish their own depots in remote areas to reduce the risk of rising cement prices. The Minister for Industry, Trade and Marketing, Dr Cyril Chami, said the time had come to ensure cement prices were uniform throughout the country.
"Although the manufacturing firms incur transport costs in shipping the product to the market, they offer it at retail prices that are not affordable to ordinary people," said Chami. He cited the case of Coca Cola, which sells its drinks at the same price in all the regions, saying this has been made possible with the availability of depot services. "Cement manufacturers should emulate what the soft drink producers are doing by establishing their own depots so as to ensure equitable retail price of the products in all the regions," he added.
According to one of the major producers in the country, Tanzania Portland Cement Company (TPCC), development in the construction industry will increase demand for cement demand rapidly. A recent report conducted by the Tanzania Securities Limited (TSL), shows that the cement industry is expected to grow further due to high demand from the construction industry, which has already increased by 10% since 2007.
"We expect demand to grow at 18% if the retail business, infrastructure development and mining investments are sustained and the economic momentum quickly returns to pre-global financial crisis levels," said Moremi Marwa, the TLS's report analyst.
Tanzania remains a net importer of cement and, despite the recent up-cycle expansion of about 1.4Mt/yr, there are plans to increase capacity by 0.75Mt/yr. This comprises 0.25Mt/yr from Lafarge (Mbeya Cement) and 0.5Mt/yr from Lake Cement in the next two years.
Ministry removes cement import restrictions
09 March 2012Saudi Arabia: Saudi Arabia's Ministry of Commerce and Industry has removed restrictions that had been in place on imports of cement, saying that it "has adopted several decisions to ensure the stability of the price of cement and its provision in the local market." The decisions include halting exports, making it obligatory for cement factories to work at full capacity and making producers bear the freight costs to the areas of increased demand. It expects that these measures will mean that cement reaches consumers at a 'reasonable' price.
This is not the first step taken to ensure that the cement supply keeps pace with the huge demand for cement that the construction boom has created. Earlier in 2012 Saudi cement factories were ordered to open up new production lines. These are estimated to have added an extra six million bags to the Kingdom's production every month, taking its total monthly production to about 80 million bags.
The moves come following complaints by cement consumers in remote areas that the price of cement had skyrocketed in recent months, with some accusing dealers of fixing artificially high prices. Saudi Arabia currently has an estimated US$163.5bn-worth of construction projects in the concept phase. It is understandable that it wants to secure the best value cement possible.
Negotiations collapse over South Korean prices
24 February 2012South Korea: A rift between South Korea's construction, cement and ready-mixed concrete companies deepened yesterday as a series of price negotiations ended in stalemate with all sides refusing to compromise.
Squeezed by soaring raw cement costs, some 750 manufacturers of premixed concrete across the country halted production on 22 February 2012, saying they are only losing money by running their plants. They demand that builders accept an 8% increase in prices of ready-mixed concrete and that cement suppliers withdraw a recent 11% increase. They had been prepared to negotiate a lower increase, but two rounds of three-way talks convened by the government have failed to break the impasse. This has seen scores of construction projects put at risk as trucks remain idle.
"Things are not working out because all sides are not willing to step back," said Bae Jo-woong, head of the Korea Federation Ready-mixed Concrete Industry Cooperatives' (CIC) emergency committee and chief executive of Kookmin Remicon. Other officials at the CIC say that the current rates leave no margin for concrete producers and do not reflect sharp growth in cost of coal, sand, gravel and other raw materials seen in 2011.
The CIC argues that while cement manufacturers secured an 11% price hike on 1 January 2012, ready-mixed concrete makers were only allowed to raise their prices by less than 4%. "It made sense to push up cement prices that had been exorbitantly cheap. The recent increase will keep the cement firms afloat but the problem now is that construction companies are resisting raised ready-mixed concrete prices," said Park Jong-rok, an analyst with a Seoul-based brokerage.