Philippine cement prices edge towards peak levels

Philippine cement prices are edging up to highs last seen in 2010 of PHP215-220/40kg bag due to higher input costs and increasing demand.

Data from the Philippine Department of Trade and Industry showed that the price of cement is PHP205/40kg bag for the Republic and Rizal brands, higher than the PHP185-190 price range in May 2011.

“We have managed to increase prices but current level is still lower by 3-5 per cent compared to 2010 suggested retail price due to high input costs and increased demand. Future increases will depend on market condition,” Holcim Philippines Commercial Director Ed Sahagun told the Manila Bulletin.

Sahagun further said that the company has been steadily adjusting prices as demand picked up and to recover rising input cost to achieve the level of profitability and sustain its business operations.

"Coal prices have been steadily steady but electricity costs have risen by double digits this year given the Mindanao power situation, where we have two plants," said Sahagun.

Roland Van Wijnen, chief operating officer of Holcim Philippines also said that the first three months of 2012 sales have risen by about 20 per cent due to increased demand for government projects and a sustained demand from the private sector.

'We are faced with steep cost increases and steep competition. Our 2011 results have shown the effect on our profitability. While we partially mitigate the impact of cost increases by increasing operational efficiencies we also seek gradual price increases," Wijnen said.

He, however, said their prices vary in every area as they operate nationwide.

One industry official noted that the PHP220/bag of cement in 2010 was the highest in the local industry’s history. The high price was not sustained as it plunged to PHP170 and has been gradually increasing. So far, prices of cement have not yet reached the 2010 levels but the industry expects prices to match the 2010 level.

Demand in the first four months increased by over 10 per cent full-year demand is expected to match last year’s 15.6Mt.