Cuban imports designed to force prices down

Cuban imports designed to force prices down
Published: 24 March 2006

Venezuela will begin to receive this week the first consignments of 500,000t of Cuban cement to help resolve the existing supply deficit in the market, local press quoted housing minister Luis Figueroa as saying.   However, despite the claims by Venezuela’s President Hugo Chávez that the agreement to bring in cement from Cuba was because of shortages in the local market, domestic cement industry sources said that the real problem was the low market prices for the product. 
Venezuelan companies produce around 9Mt of cement each year, of which 5Mt are sold domestically and the remaining 4Mt are exported.  The reason why such a high proportion is shipped abroad is because the companies are operating at a loss, as the government regulates cement prices, claimed the industry sources, according to newspaper El Carabobeño.  These imports of cement from Cuba are merely aimed at forcing the companies to lower their prices even more, said the sector insiders, who were not named by the daily. 
Chávez has made several attacks on high cement prices in Venezuela, citing this as one of the reasons for the high cost of developing infrastructure in the country. He also recently announced construction of two new cement plants in the country, one in Monagas state in eastern Venezuela and the other in Lara to the west, "to force [the cement companies] to lower prices."
The companies operating in the country have tried to work with the government to find a solution to the industry’s problems, according to the sources, and the local subsidiary of Mexican cement firm Cemex has produced a cheaper "solidarity cement" designed for use in government housing construction programs.  Cemex is the market leader in Venezuela’s cement market with 51 per cent of total sales.