Sluggish Demand Forces Down Cement Price in Taiwan

Sluggish Demand Forces Down Cement Price in Taiwan
Published: 08 May 2009

It seems that the government’s moves to raise investments in infrastructural construction to stimulate demand has failed to help the domestic cement market, with a couple of cement suppliers having already cut prices to cope with the recent sluggish demand, according to industry sources.

Taiwan Cement Corp., the leading cement supplier on the island, has cut prices by NT$100/t (US$2.99 at US$1: NT$33.4) to NT$2,600 (US$77.84) in the Taiwanese market starting May, while Universal Cement Corp. has also moved to do the same by NT$100-150 (US$2.99-4.49) to NT$2,450-2,550 (US$73.35-76.35).

Universal Cement indicated that the price cuts will surely compromise its profitability, but not very much due mainly to the recent international price drops for coal. Furthermore, the firm added, lower cement costs will help to improve its gross profit rates of ready mixed concrete.

The Goldsun Group, the largest Taiwanese supplier of ready mixed concrete, is also glad to see price cuts in cement, indicating the recent price drops in cement and sandstone, together accounting for 70% of the total costs of ready mixed concrete, will sizably benefit the industry.

Echoing domestic cement suppliers’ moves, cement importers have also lowered prices of cement to NT$2,450-2,500/t (US$73.35-74.85), and that of cement clinkers to only NT$2,300 (US$68.86).

However, industry insiders noted that the recent price cuts, including a 20% cut in the first quarter, have yet to significantly spur overall demand in Taiwan, mainly because the construction industry has almost stalled to date, despite the government’s economy stimulus measures.