Senate proposes cement futures market to resolve price war, Colombia

Senate proposes cement futures market to resolve price war, Colombia
Published: 06 September 2005

Cemento Andino recently launched legal action against Holcim, Cemex and Argos, accusing them of selling their products at artificially low prices to damage competitors and eventually enable them to buy them out.

During the meeting, Cemento Andino president Federico Molina repeatedly asserted that current cement prices in Colombia do not even cover production costs, so smaller domestic companies will certainly go bust if the situation continues unchecked.

The big three companies, who control 91% of the Colombian cement market, claim that prices have fallen due to market forces, "but one of the senators said if you think this is merely a matter of supply and demand, surely you can maintain those prices and we can form a futures market as with oil or agricultural goods," the company insider said.

"It is basically an attempt at intimidation... the senate can’t really determine market prices, but it could demand for a period that the companies sell cement to the state for construction at this price," the source said.

This is a proposal that would show whether it is really true that low cement prices are in accordance with market conditions and not just a tactic to pressure small cement companies into selling their plants, senator Serrano said.