Russia cement prices seen falling 33 per cent, June-Nov

Russia cement prices seen falling 33 per cent, June-Nov
Published: 01 October 2008

Russia’s largest cement maker, Eurocement, is cutting back production and manpower at most of its factories as prices are set to fall another 10 per cent by the end of November, the company said on Tuesday. Russian cement prices dropped 23 per cent during the summer months after import tariffs were lifted and suppliers from Turkey and China began flooding the market.

Slackening demand is also pushing down prices, as the global financial crisis cuts off long-term funding for major construction projects.

Eurocement, by far the biggest local cement producer with a market share of some 35 per cent, is being forced to slash production and shorten working days at most factories, a spokeswoman for the unlisted company said.

"In particular our brick-firing kilns have been completely shut down, most of them," said the official spokeswoman, who declined to be identified.

The company’s investment programme was also being reconsidered, with some resources shifted away from cement and bricks towards other products, she said.

"We don’t know how people are going to react to the shortened work day, whether they can take it ... but right now the workers seem to understand that the company is going through a very difficult time," she said.

Austrian construction giant Strabag SE , in which Russian billionaire Oleg Deripaska owns a 30 per cent stake, said on Monday it was postponing plans to develop its cement business in Russia due to the recent price falls.

French cement major Lafarge is building several new plants in Russia at a cost of up to €1bn.

Eurocement said a drop off in demand, especially in central Russia and the Moscow region, was also beginning to take its toll on the company.

Construction work showed its first decline this year in August, a month when the weather normally allows more projects to be undertaken. Nationwide the value of construction in August fell 4 percent compared to July to RBL415bn (US$16.44 bn), according to the state statistics agency.