Cement prices seen to stabilise

Cement prices seen to stabilise
Published: 01 April 2005

Republic Cement Group of Companies forecast of stable cement prices in The Philippines for the first half of the year due to improved production efficiencies and favorable peso-dollar exchange rate cushioning the impact of higher inflation. Republic Cement president Juan Miguel Montinola said these favourable developments have enabled companies to absorb the effect of inflation (eight per cent) and prevent them from raising prices during the summer months, the peak of construction activities. "The biggest threat to stable cement prices within the next quarter is an increase in power rates," Montinola said.

Montinola said the last time the company effected a price increase was in January and this was shortly after the implementation of the power price increase last November 2004. "The magnitude of that power rate increase which was 34 percent increase for Luzon left us no choice but to adjust our prices upwards," he said. But with the spiralling increases of crude oil, it wont be long before the National Power Corp. and power utility firms push for corresponding adjustments in electricity rates.

According to Montinola, Republic has said that except for the adjustment in January, the company has kept its prices constant. In fact, for the past six months the ex-plant price of the Republic Cement Group in the National Capital Region only increased by an average of four per cent from R134 to R140 per 40kg bag of ordinary portland cement.

Republic Cement Group of Companies, majority owned by Lafarge, consists of five operating cement plants in Luzon and Mindanao. Aside from parent company Republic Cement Corp., the other affiliated cement companies include Fortune Cement Corp., Continental Operationg Corp., FR Cement Corp and Iligan Cement Corp. At present, the group accounts for 33 per cent of the local market with capacity of 10Mt and operating capacity at 5.3Mt or more than 50 per cent of capacity.