Mombasa price drop worries cement players

Mombasa price drop  worries cement players
11 July 2010

A cement distributor for the latest entrant into the Kenya cement market, Mombasa Cement, has set what appears to be the lowest price for the commodity, sending jitters in some quarters of the industry.

A chief executive of a cement maker admitted he had called the firm after one of its distributors, Tuffsteel, advertised its 50kg pack at Sh630 in Nairobi.

The same pack by competitors retails for at least Sh700 in most outlets.

In 2003 East African Portland Cement Company (EAPCC) price slash resulted in a major dip in profitability of the whole industry.

The firm then under the stewardship of acting managing director, the late Birya Charo, was not spared the loss making.

However, Mombasa Cement on Friday was swift in clarifying that it was not in anyway engaged in a price war.

"We were as surprised as everyone else when we saw the advert. We do not advertise our prices; maybe they are trying to sell other products together with the cement," said a senior manager at the firm who is not authorised to speak to the press.

Mombasa Cement, a private entity, which operates Tororo Cement in Uganda and Kenya’s Corrugated Steel Mill, owns a cement factory in Athi River and a clinkering plant in Mombasa.

It is estimated to have a capacity of nearly 1Mt in Kenya and produces the Nyumba brand.

Besides the firm, other players in the sector are Bamburi Cement, EAPCC and Athi River Mining. National Cement, to be operated by the owners of Devki Steel Mills, is expected to open its factory in Athi River in a few weeks.

A Bamburi official dismissed the price cut as an act of a single distributor as opposed to a trend. Whether this will result in further cuts in prices remains to be seen.

Operators earlier in the year promised to gradually bring down prices in lieu of sparing themselves removal of the 25 per cent import duty - and exposing themselves to Chinese and Pakistani imports.

Source: All Africa

Published under Cement News