Producers say market will determine cement price

Producers say market will determine cement price
Published: 14 June 2006

The Dominican Association of Cement Producers said today the market will set the product’s price, and considered that the cost agreed-to with the Industry and Commerce Ministry to end the “price war” did not cover production.  Association executive Miguel Angel Treviño, who is also general manager of Cemex Dominicana, divulged results of a study conducted by the entity on the cement industry situation.

He affirmed that, for one-and-a-half years, the Dominican market had not reflected a real price for the cement.  Yet, in his view, after various months of an artificial decline, cement prices began to seek their “real level.”

Studies determined that 60 percent of cement production costs are disbursed in dollars, versus the remaining 40 per cent that can be paid in pesos.  Of the costs, 41 per cent correspond to fuel and energy supply. The study described the impact of energy cost as critical, given that costs, with taxes applied to the user, duplicate the average in Latin America.

Treviño stressed that, notwithstanding the economic crisis and the diminished construction rate, “during the past years, the Dominican Republic continued to be the second country, below Puerto Rico, with highest cement consumption per capita.

According to the study, the price in the Dominican Republic is 175 percent lower than the average in the region, where by local price is 3.79 dollars per bag, while the average in the region is 5.75 dollars. Inflation on cement, per the document, has been significantly negative during the past 14 months, contrary the general tendency in the other economic sectors.

The study surmises that, at the current prices, “the State will continue to lose approximately 85 million pesos a month, for a yearly loss of 20 million pesos.”