UK Castle warns of cement price hikes

UK Castle warns of cement price hikes
Published: 06 October 2004

Castle Cement has that warned cement prices are set to rise by 10% to 15% early next year. Mike Eberlin, Castle Cement’s commercial director, said the move has been prompted by "an exceptional set of conditions" in discussions with reporters from the UK Contract Journal. "If anyone is tendering, we want them to know what’s in the pipeline," Eberlin said. "We’re not used to putting prices up by such a lot, but the cement industry faces high energy price increases, with Castle’s coal bill going up by more than 20% and electricity by almost 50%. "These have a disproportionate effect on cement manufacture because it is such an energy-intensive process," he added. Castle Cement will lift the price of its pack cement on 1 January 2005 with bulk cement rises coming into effect on 1 March. "The increase, between 10% and 15%, will depend on geographic location, as well as product type and also who the buyer is," Eberlin said. "In 2003 there was a zero increase for cement.

In fact prices went down for a number of reasons: there was a lot of competition pressure; production by Rugby [another cement producer] was going up and down; Aggregate Industries started importing aggressively and others were also importing; and the bottom fell out of the German construction market, resulting in a cement oversupply in the rest of Europe. "In 2004, cement prices went up by just 2% to 3%. The increase started off as more, but the process is dynamic and the asking price gets nibbled away." The Chromium VI Directive, effective in January 2005, prevents the marketing of cement products containing more than two parts per million soluble chromium VI because, in wet cement, the trace element may cause allergic contact dermatitis in some workers. Eberlin said that adding ferrous sulphate as a reducing agent would add £1/t to cement-making costs. Castle has also struck an agreement with the TGWU for a change in working patterns to take account of the reduction in drivers’ working hours to a maximum of 48 hours.