Retail prices of cement in northern Luzon, Philippines went as high as R170 per bag (42.5kg), the highest since the imposition of definitive safeguard duty, due to the shortage of supply caused by the simultaneous shutdown of two big cement plants in the area two weeks ago - reports the Manila Bulletin.
Based on the monitoring of the Department of Trade and Industry, prices of cement in Regions 1, 2, 3 and the Cordillera Autonomous Region were on the rise because of the defective kilns of Union Cement in La Union causing a 20 percent reduction in production of cement. Also, Northern Cement in Pangasinan, bogged down two weeks causing an additional shortage in the supply of cement in these regions.
Both companies have an average combined monthly production of 3.2 million bags last year. In the first quarter this year, both factories have a combined production of 4.1 million bags. Following the shortage in supply, prices of cement in Tuguegarao went as high as R170 per bag while prices in Baguio and La Union reached R160 per bag. Before the shortage, prices of cement in these area averaged between R140 to R145 per bag.
Rico Alfiler, president of Cement Manufacturers Association of the Philippines, said he was assured the production problem of both cement firms have been corrected and that the supply situation is normalizing and prices should go back to their normal level.Even during the two week production lull in both cement firms, Alfiler said there should be no reason for prices to go up because other cement factories in Bulacan and nearby provinces have supplied additional cement there."I have also talked to other cement manufacturers outside of these regions and they committed to supply these affected areas with more cement," Alfiler said.
According to Alfiler, additional cement supply would be coming from as far as Cebu in the Visayas and
Mindanao. Alfiler said that prices of cement should not go beyond the six percent increase they implemented last week to recover additional costs in foreign exchange and power.
DTI Undersecretary Norman R. Hocson also said that both companies are also having difficulty getting coal for their production. Coal, which is imported, has tripled in price since December last year.Prices of coal have gone up to $44 per ton now from $35 per ton a year ago."The DTI is coordinating with the cement industry in order to stem the price increases as quickly as possible. In fact, Union Cement officials have coordinated with the DTI¹s Region 3 office and promised a R155 pick-up price per bag of cement," Hocson said. DTI monitoring teams have observed a high compliance among retailers, although some still sell at R160 per bag.
The DTI has already reduced by R5 the R20.60 safeguard duty imposed on per bag of imported cement to facilitate the importation of cement. Lately, the DTI also ordered a reduction to 7 days from 28 days the testing period of imported cement to reduce the cost of importation.So far, such twin moves have not yet encouraged importation of cement. The definitive safeguard measure,which was meant to protect the local industry from unfair trade competition, will expire in December this year. Some analysts noted that historically, prices of cement did not go as high as R170 per bag. Even during the investigation for the safeguard measure, prices of cement went only as high as R160 per bag. This makes the R170 per bag of cement registered in northern Luzon as of the third week of May was the highest so far. (Original report: Manila Bulletin)