PPC and Cimpor to raise South African cement prices

PPC and Cimpor to raise South African cement prices
Published: 05 December 2008

Pretoria Portland Cement (PPC) will increase its cement price by an average of 15 per cent next month and Cimpor is also planning to hike prices simultaneously.

Piet Strauss, the managing director of NPC-Cimpor confirmed yesterday that the biggest supplier of bulk cement in KwaZulu-Natal would raise prices from January 1, but declined to comment on the size of the increase.

NPC-Cimpor was severely criticised in October for imposing a five per cent hike effective from last month, its third price increase during this year.

John Gomersall, PPC’s chief executive, said yesterday that the price increases were driven by sharply higher fuel costs, especially diesel, and higher coal and electricity prices.

"Distribution costs are one of the big drivers of this cost increase. Year on year we hopelessly underrecovered on our transport costs in the year. Our transport costs in the fourth quarter were 35 percent up on the previous year."

The cost of electricity to PPC was 28 percent higher in the last quarter of its financial year to September compared with a year earlier while coal prices were 40 percent higher in the same period.

Gomersall said the listed cement and lime producer had not put through all its cost underrecoveries in its January price increase because this would be "unacceptable".

"We’re taking a little chance on oil prices coming down over the next year, but if diesel prices continue to come down, it will be reflected back in the price to customers. We have absolutely no intention of exploiting this situation," he said.

Gomersall said the company had discussed an energy surcharge on its price increase with its major customers, but all of them had indicated this would just involve a lot of administration and they preferred "a clean price".

The SA Property Owners Association (Sapoa), which represents major commercial, industrial and retail property owners, has reacted with dismay to the proposed price increases, claiming that they would place the feasibility of projects under severe strain.