Barbados cement firms unlikely to hike prices

Barbados cement firms unlikely to hike prices
Published: 05 August 2008

BS reported that Indian cement majors, which had agreed in May to hold prices for three months to help the government contain inflation, could find it difficult to raise rates when the moratorium ends on August 14th 2008.

Top producers say the current market condition is not buoyant enough to absorb a price hike. This means the cement industry may have to continue absorbing the input cost for a major period of the current quarter.

Mr AL Kapur MD of Ambuja Cements said that "I would want prices to go up, but the market is not ripe enough to absorb any hike. On the contrary, prices could come down as demand dips by 15% to 20% around this time of the year as a result of rains.”

Barbados market not big enough for another producer

There  is definitely no room in Barbados for another cement manufacturer, according to Trade, Industry and Commerce Minister, George Hutson.

Speaking recently about the industry in the wake of an increase in the price of cement to Barbadians, Hutson told the media that the size of the local market cannot support another cement manufacturer.

"Certainly the size of the market will not support it from an economic point of view, thats the reality of it," the Minister explained.

However, he said that if someone wants to establish another company to manufacture cement in Barbados there will be no objections from Government. "But it is not going to happen because of the nature of the product," said the Minister.

"The cost of fuel and inputs into cement manufacturing is the same whether you buy the cement out of Trinidad or from wherever. And those prices are going up as well," according to Hutson.

The Minister has also pointed out that if business houses were able to bring cement into Barbados at a better price they would do so. "People can import it ... but the fact that they are not importing cement in a large volume tells you that it is not economical from a business point of view," the minister said.

The lone cement manufacturer in Barbados is the Arawak Cement Company Limited (ACCL) which is owned by the Trinidad Cement Limited.

The Minister pointed out that right the local market can only absorb about 50 per cent of the capacity of the ACCL. "That is the extent of the market in Barbados and we are going through a construction boom. But that is not something that will last for the next 50 years. Construction like any other sector has its ups and down," said the Minister.

Official data published in the 2007 Barbados Economic and Social Report, stated that cement production fell for the second consecutive year reaching 316. 5 thousand tonnes. This was a six per cent decline on the amount for 2006.

Barbadians were to begin paying higher cement prices from the beginning of this month. The company blamed higher input costs for the increase. Hutson said that most of the cement manufacturing in the Caribbean is done by Trinidad Cement Limited.