Philippines: Higher cement prices prompt dialogue between trade, firms

Philippines: Higher cement prices prompt dialogue between trade, firms
Published: 24 December 2009

Trade and cement manufacturing officials met recently to discuss surges in retail price of cement in the local market ranging from P10.00 to P40.00 in the past week.

Trade undersecretary for consumer welfare Zenaida Cuison Maglaya told reporters that their regional and provincial offices have monitored these unusual price increases and the claims of some retail outlets that they lack supply.

"We are asking for their (manufacturers’) assessment of the situation in the market," said Maglaya.

The manufacturers explained that reduced production due to scheduled maintenance work and logistics of transporting the cement to typhoon-affected areas led to the price volatilities.

Cemex and Holcim told the trade officials they had not adjusted their suggested retail price (SRP) since October and September of 2008, respectively.

Renato Sunico of Lafarge Cement, manufacturer of the Republic brand, said they adjusted their list price to cover increase in the cost of their production inputs. But he said the price adjustment was only P3—far from the P10 to P40 range based on the trade department‘s price monitoring.

As for the tightness in supply, the cement manufacturers cited the annual preventive maintenance that Cemex (Antipolo plant), Holcim (Bulacan plant), and La Farge (Bulacan) scheduled in December. These temporary production halts reduced cement supply for select areas.

According to Dr. Ernesto Ordoñez, president of the Cement Manufacturers Association of the Philippines (CEMAP), December is usually a slow month for cement, thus, plants traditionally undergo preventive maintenance, and they were surprised by the upsurge in cement demand.

In the case of supplies to Metro Manila and surrounding areas, the cement manufacturers cited the collapse of the "Bridge of Promise" in Batangas caused by typhoon Santi for reducing the delivery of Republic cement plant from 60,000 bags to 20,000 bags per day.

However, representatives at the meeting assured that supply tightness at the retail level is temporary and that they expect the situation to normalise before Christmas.

"In addition to normalised cement delivery from Batangas and the resumption of operations of cement plants on preventive maintenance, we have arranged for additional shipments from APo cement plant in Cebu and the Holcim plant in Laugait, Mindanao. Consequently, there will be more than adequate supply of cement within the week," reiterated Mr. Ordoñez.

Undersecretary Maglaya warned retailers that whoever will be caught selling above the suggested retail price of cement will be dealt with accordingly, pursuant to the Price Act. Also, retailers who refuse to sell, but is found out to have supply will be charged with hoarding.

To validate the said reports and pursuant to Section 6, Rule IV of the Implementing Rules and Regulations of Republic Act 7581 or the Price Act, DTI’s Regional offices in Rizal and Bulacan to conduct spot- inspection of cement plants to determine the status of their operation; present operational capacity to know the volume or number bags being produced per day; and their current plant inventory," reported Maglaya.

"If the plant is really on shutdown, DTI monitoring teams are to gather information on the date when it was closed, the reason and until when it will remain closed," she added.