Philippines: cement prices start to rise

Philippines: cement prices start to rise

Local cement manufacturers raised prices from 1 February 2014 by an average of PHP8/40kg (US$0.17/40kg) bag of cement to PHP220 (US$4.85) from PHP212 (US$4.67) per bag amid strong demand for cement on huge government infrastructure projects on top of buoyant construction activities from the private sector.

Cemex Philippines was the first to implement the price increase as part of its scheduled annual price rise. The two other multinational players, Lafarge Republic Inc and Holcim Philippines, are also expected to follow suit. These three foreign-owned cement firms account for 80 per cent of the local market. The Cojuangco-owned Eagle Cement is usually the last among the cement firms to raise prices.

Under its agreement with the Department of Trade and Industry, cement firms must inform the agency first of planned price hike before they can implement the increase.

Cement sales in 2013 grew 5.9 per cent to 19.45Mt from 18.36Mt in 2012. The last quarter of 2013 added 4.5Mt in sales or 2.1 per cent higher than the 4.4Mt in the same quarter of 2012.

In 2012, the local industry posted a 17.5 per cent growth, its highest in 15 years, having sold 18.4Mt of cement from 15.6Mt in 2011.

The Cement Manufacturers Association of the Philippines (CeMAP) said that strong growth is expected in 2014 because of continued confidence in government and a large increase in budget of the Department of Public Works and Highways for infrastructure and housing programmes.

Cement firms have expanded their capacities also in anticipation of the huge demand for cement amid a growing economy.

Last year, Cemex Philippines announced a PHP2.5bn expansion of its Apo Cement Corporation's facility in the city of Naga, Cebu. The expansion plan would increase the Naga plant's production capacity by 1.5Mta to 4Mta.

Cemex is installing a vertical roller mill, said to be the latest technology in cement making, which is expected to be ready for commissioning in the 2Q14.Lafarge's new grinding mill would have the capacity to produce 0.85Mta of cement, with target commissioning date in the 2Q15.

Likewise, Holcim Philippines said it will construct a new plant in Norzagaray, Bulacan. The plant will add around 2.5Mta to the company's annual production by the end of 2016. Holcim was also on track to fully revive its grinding facility in Mabini, Batangas. The new facility will boost production capacity by almost 1Mta.

In October 2013, Taiheiyo Cement Philippines, Inc (TCPI) announced plans to invest US$10m in the expansion of its plant in San Fernando, south of Cebu. The company said it was prompted to expand because of the country's encouraging economic growth and repositioned debt.