DTI sees local cement makers cutting prices, Philippines

DTI sees local cement makers cutting prices, Philippines
25 November 2008

The Philippine government expects consumers to feel the benefits of the controversial move to lift for six months the tariff on cement even before the imports enter the market in January.

This is because the local manufacturers will probably reduce their prices early on just to get a better grip of the market and prepare for tough competition with the importers of cement, Trade Undersecretary Zenaida Maglaya told the BusinessMirror on Monday.

Based on experience, Maglaya said, cement makers in the country will not allow their ex-plant prices to go above the expected landed cost of the imported cement.

She said they got information that cement from Japan can come in at P170 per 40-kilogram bag. The country can also import from China and other Southeast Asian countries.

The executive order removing the 5-percent tariff on cement for six months takes effect on December
21. The imports will then go through the mandatory seven-day test of the Bureau of Product Standards before they are allowed to be sold in the market.

Besides the importers, the local contractors can also buy cement from other countries on their own, Maglaya said. The local manufacturers, she added, will surely monitor closely their price differential with the imported cement, and make adjustments accordingly to avoid losing their market positions.

“They don’t want that to happen, so the local manufacturers might reduce their prices [even] before the imports get into the market,” Maglaya said.

The current retail price of cement in Metro Manila ranges from P200 to P205 per bag.

Trade Secretary Peter Favila said the acceptable level should be between P170 to P180; and since the local industry could not go down to this range, the government decided to push through with the elimination of tariff.

The local cement makers, dominated by Holcim, Lafarge and Cemex, had said they would rather compete with the importers at zero tariff than follow the price recommended by the government, since it would only result in losses for them.

Maglaya said the trade department will ask for the inward foreign manifest of the ships bringing in the imported cement to make sure they are aware of the real price and volume of the imports for traceability and monitoring.

She said if importers are guarded and monitored properly by the government, they will probably be selling a bag of cement at P20 to 30 lower than the current price.
Published under Cement News