Cement consumption up by 14% in Q1, Philippines

Cement consumption up by 14% in Q1, Philippines
Published: 24 April 2007

Local cement manufacturers are upbeat on this year’s business prospects as consumption of cement grew 14% to 3.285Mt in the first quarter -the highest since 2001.  
 
The amount is almost 500,000t more than the 2.883Mt reported during the same period last year, the Cement Manufacturers Association of the Philippines (CeMAP) said.  
 
"From 2001, cement consumption remained flat. The first-quarter growth is significant because it is the first since 2001," CeMAP President Ernesto M. Ordonez said.  
 
He said there had been spikes in the past but not enough to drive YoY growth.  
 
CeMAP said 2006 cement consumption - including imports - reached 11.726Mt, versus 11.584 metric tons in 2005.  
 
Mr. Ordonez, who earlier bared that sales of cement for 2007 would increase by 2% to 5%, said his group was optimistic of this year’s sales prospects given the rosy business outlook for construction.  
 
Domestic cement sales in 2006 fell by 2% at 11.48Mt compared with 2005’s 11.67Mt.  
 
Mr. Ordonez said capacity utilisation by local manufacturers have reached "close to 60%" compared with "lower-than-54%" utilization late last year.  
 
The local cement industry, however, has been criticized by the World Bank for allegedly jacking up prices by as much as 75% since 2000 because of its "oligopolistic" structure.  
 
The Department of Trade and Industry has said it would keep a close watch on cement prices and might allow more imports of cheaper cement to stir competition.  
 
According to the World Bank, the local cement manufacturing industry is 90% dominated by multinationals such as Cemex, Holcim, and Lafarge.  
 
Aside from the three, CeMAP members include Northern Cement, Pacific Cement Philippines, Taiheiyo Cement Philippines, and other smaller players.  
 
Data from the Trade department showed that the price of cement increased last month by P1 to P2 from February, and by P2 to P5 from November last year after manufacturers raised factory prices to cover increases in production costs and inputs such as gypsum and coal.  
 
The Trade department has asked local cement manufacturers to submit a breakdown of costs to validate the basis of price increases of cement in recent months.  
 
But as of yesterday afternoon, the list has not been completed, said Trade Undersecretary Zenaida Cuison Maglaya, who monitors the cement industry.  
 
Trade Secretary Peter B. Favila had said that he would facilitate the importation of cheaper cement if local manufacturers fail to justify price increases.  
 
The price for a 40kg bag of cement in the Philippines is P175. The World Bank noted that cement prices in the Philippines are among the highest in Asia, at $72 per ton as of late 2006, compared with $35 in China, $50 in Thailand, and $65 in Vietnam.  
 
But even with cheaper alternatives, Mr. Ordonez claimed that local contractors and property developers choose to buy local cement because of "after-sales services" such as logistical capability to deliver to project sites, as well as quality.