Increases in cement prices, which Philippine cement producers have either implemented or are planning to implement soon, are necessary despite expected sluggish demand in the rainy season as manufacturers seek to recover high production costs, according to the Cement Manufacturers Association (CeMap).
Ernesto Ordonez, president of CeMap, said that in 2001, cement manufacturers sold their products even at a loss arising from depressed demand. They did so to cover production costs even if in the end, the return on assets was negative.
Manufacturers have at least been doing better this time, he said, with demand buoyed by fourth quarter 2009 election infrastructure spending and storm Ondoy-related repairs. However, inputs to production have been quite high and would have to be recovered through product pricing.
“It’s the first time that the industry is increasing prices since 1997, even if our power 1997” he said. “But the industry can’t just increase prices because of threats of dumping.”
To protect the industry from dumping, he said Cemap would be asking the government to reinstate the five-per cent tariff on cement imports.