Justify price hikes, cement makers asked

MANILA, Philippines—The Department of Trade and Industry (DTI) is asking cement manufacturers to justify recent price hikes that led prices to exceed the suggested levels set by the agency.

Trade Undersecrertary Zenaida C. Maglaya said the three largest cement firms in the country (Holcim Philippines Inc., Lafarge Republic Inc., Cemex Philippines) have started submitting documents to support adjustments in their prices, while new player Eagle Cement is set to meet with DTI and Board of Investment officials to explain their pricing scheme.

The suggested retail price (SRP) for cement was set at P205 to P210 per bag.

Maglaya said one of the large cement manufacturers had made a submission but had yet to complete all requested data due to “antitrust issues,” referring to laws addressing anti-competitive behavior among corporations.

New player Eagle Cement, meanwhile, is set to meet with DTO and BOI officials “before the end of the month.” Maglaya said the BOI will have a representative because Eagle Cement is a BOI-registered firm.

She said a report compiling the price adjustments and the corresponding explanation given by the concerned manufacturers would be submitted to Trade Secretary Gregory Domingo.

In April, Maglaya said cement companies increased their prices due to the higher cost of coal, a raw material that accounted for about 25 percent of the cement industry’s manufacturing cost.

Holcim reportedly raised its price to P216 per bag from P195 last year; Lafarge (Republic brand) to P220 from P205 per bag; Cemex (Rizal brand) to P225 from P195 per bag; and Eagle Cement to P220 per bag from at P210.

As a BOI-registered firm, Eagle enjoys tax breaks and other perks for its cement manufacturing operations. However, it has to sell at prices lower than prevailing levels.

In 2012, the Cement Manufacturers’ Association of the Philippines Inc. (Cemap) reported record-high sales of 18.4 million tons, up by 17.5 percent from 15.6 million tons in 2011). This was due to the boom in public and private construction projects. In the fourth quarter of 2012, 4.4 million tons of cement were sold compared to 4 million a year before.