Japanese cement firms seen scaling back hike plans

Japanese cement firms seen scaling back hike plans
Published: 06 January 2009

Taiheiyo Cement Corp. will raise cement prices by just 10-15% this coming April, backing away from the roughly 30% increase it indicated in October, according to the latest plans unveiled by the company.

The revision in the scale of the planned hikes by the top cement maker comes in light of declining fuel costs. Demand for cement remains stagnant as well. Third-ranked Sumitomo Osaka Cement Co. is also expected to make a similar decision in January.

In mid-December, cement was sold for 9,600 yen to 10,000 yen per metric ton to large-lot customers in the Tokyo region, after prices were lifted by about 10% last April for the first time in four years. In October, Taiheiyo Cement and Sumitomo Osaka Cement said prices would be raised by an additional 3,000 yen or so per ton next April.

However, coal costs, which were cited as a basis for the planned price increase, started falling, forcing Taiheiyo Cement to reduce the scale of the increases to 1,000 yen to 1,500 yen per ton. The company also took into consideration growing objections from ready-mixed concrete companies, which are having difficulty passing on higher prices to contractors.

Although fuel costs are falling now, Taiheiyo Cement and other cement producers were unable to fully incorporate the surge in fuel and materials costs over the last four and a half years into their sales prices.