Cost of South African cement set to increase

Cost of South African cement set to increase
Published: 12 May 2008

Cement prices are set to rise significantly again from July, although one of the major local producers is resisting the industry pricing trend.
 
Pretoria Portland Cement (PPC) and NPC-Cimpor confirmed last week that prices would increase from July, while Afrisam South Africa (previously Holcim South Africa) said an increase at the same time was likely.
 
However, Lafarge South Africa chief executive Albert Corcos said it had not increased its cement prices this year and he was unsure when it would do so again.
 
The price increases will hurt the housing market, particularly low-cost housing projects, where cement costs account for more than eight per cent of the project cost, compared to only 1.6 per cent for a shopping centre development.
 
John Gomersall, PPC’s chief executive, said it had increased prices by eight per cent in January and normally had “a small top-up” in the middle of the year.
 
But Gomersall said PPC had underestimated its January increase and would have to put through more than a minor price hike in July.
 
He said the increase was driven by internal inflation experienced by the company, which was several percentage points more than the most recent producer price inflation rate of 11.8 percent.
 
Major drivers were the cost of diesel, with delivery costs up 19 per cent YoY; coal prices, which were 30 per cent higher YoY; and electricity prices, which were up 14 per cent, with municipal prices up even higher.
 
Gomersall said prices on imported spares and consumables were between 25 per cent and 30 per cent higher and the cost of skills was also going up.
 
Pieter Strauss, the managing director of NPC-Cimpor, said it had increased its prices in January by between five per cent and 10 per cent, depending on the product. He said it would be increasing its prices “by a similar magnitude” in July.
 
Karl Meissner-Roeloff, the chief executive of Afrisam SA, said it normally had two price rises a year. It had increased its prices by an average of about 5.7 percent on January 10.