Philippine cement makers to justify price hikes - Trade execs

Philippine cement makers to justify price hikes - Trade execs
Published: 13 March 2007

Cement producers have said they will not raise cement prices until the end of summer and that they will submit a list of costs that have forced them to increase cement prices, Trade officials told reporters yesterday. 
 
This, after a World Bank presentation during the recently concluded Philippine Development Forum [PDF] in Cebu City showed that Philippine cement prices were among the highest in Asia.  
 
"They [cement manufacturers] promised to keep the price up to the end of summer," Trade Undersecretary Zenaida Cuison Maglaya said in an interview.  
 
Trade and Industry Sec. Peter B. Favila, who said he engaged top executives of two multinational cement makers, Holcim Philippines and LaFarge Phils., in "one-on-one" dialogues, told reporters these officials had promised to submit a breakdown of costs that will validate the bases of price increases of cement in recent months. Executives of  Holcim and LaFarge were not available to confirm this yesterday afternoon.  
 
Data from the Trade department showed the price of cement has increased this month by an average of P1 to P2 since February, and by P2 to P5 from November last year.  
 
Cement makers had earlier said they raised factory prices at the beginning of the year to cover increases in production costs and inputs such as gypsum, coal, and ware parts, amid a slowdown of sales in 2006. Specifically, the Cement Manufacturers Association of the Philippines earlier said sales slightly weakened in 2006, with sales declining by nearly 2% to 11.48 million metric tons  
 
In its presentation in the PDF, the World Bank said demand for cement fell between 2000 and 2005, but producers jacked up prices by as much as 75%. The bank also said cement sold in the Philippines was priced at about $72 per MT compared with China’s $35/MT, Thailand’s $50/MT, and Vietnam’s $65/MT.  
 
It also described as "oligopolistic" the structure of the local cement industry with  Holcim, LaFarge, and Cemex controlling over 90% of clinker capacity.  
 
Ms. Maglaya said the Trade department also tried to contact Cemex on the same matter, but that its top official was out of the country and its representatives were not authorized to talk about prices. "We’ll sit down with the companies again after we get [the breakdown of their costs]," she said, adding that Holcim and LaFarge have committed to provide the data by next week.  
 
Mr. Favila declined to discuss options if cement companies will fail to justify price increases. Last month, Mr. Favila said the government is prepared to allow more cement importation if cement producers fail to justify the increase in prices.