South African cement prices are set to increase next month despite the continued severe slump in building activity and lower sales volumes.
AfriSam said yesterday: “In an effort to shield the consumer and absorb the cost increases as far as possible, AfriSam is looking at increasing its cement prices in July 2011 by between six and eight per cent.”
Lafarge South Africa also confirmed it had sent letters to customers advising them of an increase from mid-July, which would vary between regions and the contracts with its customers, but would be between four and five per cent.
Grant Neser, AfriSam’s commercial executive, said the domestic cement industry was experiencing a sustained downturn, volumes had peaked in 2007 and were expected to decline for four consecutive years before a slow recovery, starting next year.
However, Neser said market conditions had also resulted in serious pricing pressure and cement prices had been flat to declining for the past 16 months. “We will continue striving to offer our customers the quality and service for which our brand is renowned while at the same time absorbing cost increases as far as possible,” he said.
Lafarge SA chief executive Thierry Legrand said its previous cement price increase was in mid-January, when prices were increased by about 6-7 per cent.
However, he said the “erosion” of this price increase meant the company only realised a price increase of 4.5 per cent. He said increased input costs were responsible for next month’s price rise.