Philippines: price of construction materials expected to rise

Philippines: price of construction materials expected to rise
Published: 04 August 2008

The price of construction materials, specifically cement, is expected to increase due to the continued increase in coal prices.
“The price of coal continues to go up,” Holcim Philippines Inc. chief financial officer Ed Sahagun told The STAR in a telephone interview.
The price of coal now is more than double when compared to a year ago. Coal now is at $130 from only $60 last year.
Sahagun said they expect coal prices to hit $140. He did not say by how much cement prices will increase saying only that for every $10 adjustment in the price of coal, the impact to them is P2.
“It’s hard to absorb all the costs because the coal affects 40 per cent of our variable cost,” Sahagun explained.
In addition to this, Sahagun said the price of coal also has an impact to the price of power.
“Because the price of coal continues to move up, the government cannot hold off power rates increases,” he predicted.
Likewise, Sahagun said the price of oil especially petroleum continues to move up. This is a concern for cement manufacturers because delivery cost is part of the cost of cement.
“The price of diesel is rising and this means that freight charges are also increasing,” he said.
The last time Holcim increased its price was in June when it raised its prices by P8.
Meanwhile, demand for cement decreased during the first five months of the year despite the continued construction activity in the Metro Manila area including nearby provinces.
“The latest data showed that demand for cement went down 0.3 percent when compared to the same period the previous year,” Cement Manufacturers Association of the Philippines (CEMAP) president Ernesto Ordonez said.
Ordonez said he cannot explain why the demand for cement dwindled especially since there is an obvious upsurge in construction activity.