Taiwan Cement sees export price rise in 2006

Taiwan Cement sees export price rise in 2006
Published: 19 October 2005

Taiwan Cement Corp, Taiwan’s largest cement marker, said on Tuesday it expects export prices to rise as much as 10 per cent in 2006 as demand continues to be strong in the Middle East, Africa and the United States. Global cement prices are increasing and supply remains tight, said the company’s vice president of sales, Edward Huang, citing robust demand from the United States in the aftermath of Hurricane Katrina.

"I’ve been in talks with our clients about next year’s contract prices and quantity. We’ve received enough orders to almost fill up our capacity next year," Huang said. He said FOB (free on board) cement prices would rise by US$2-4 per tonne in 2006, equivalent to about a 5 to 10 per cent increase from this year.

Huang said Taiwan Cement would export 5.2Mt of cement from the island in 2006, while the remaining 5.5Mt would be sold at home.

Like many Taiwan companies, the firm has turned to the huge Chinese market for growth. But China’s macro-economic controls, to prevent the mainland economy from overheating, have made it difficult for cement prices to rise there.

"It’s going to take one year for prices to return to reasonable levels", Huang said, adding this would be the case even if demand remains strong. Smaller rival Chia Hsin Cement Corp, which also has production lines in China, expressed similar concerns.

In an effort to boost sales, Chia Hsin started shipping to the United States in August, said Wei Yun-Sun, secretary general of the Taiwan-based company.

Chia Hsin bought 15.3 million shares in Taiwan Cement for T$307.4m (US$9.2 million) last month, pushing up its stake to 1.09 per cent, according to a document that Chia Hsin filed to regulators recently. The stock purchases were mostly for financial reasons rather than a strategic investment between the two, Wei said.