Stable cement prices seen

Republic Cement Corp. president Juan Miguel Montinola expects cement prices to remain stable for the first half of the year.

According to Montinola, recent favorable developments such as additional production efficiencies and the peso appreciation has helped Republic Cement to absorb the effect of an eight percent inflation rate and not raise prices during the summer months.

However, Montinola warned "the biggest threat to stable cement prices within the next quarter is an increase in power rates."

Montinola pointed out that the last time Republic effected a price increase was in January, shortly after the implementation of the power price increase last November 2004.

He explained that the magnitude of the November power rate increase, which was around a 34 percent increase for Luzon, left Republic no choice but to increase its prices.

Montinola pointed out that for the past six months, the ex-plant price of the Republic Cement Group in the National Capital Region (NCR) increased by an average of four percent from P134 to P140 per 40 kilogram bag of ordinary Portland cement.

Alternative cement products at lower prices have also been introduced.

The Republic Cement Group of Companies consists of five operating cement plants in Luzon and Mindanao.

Aside from parent company Republic Cement Corp., the other affiliated cement companies include Fortune Cement Corp., Continental Operating Corp., FR Cement Corp. and Iligan Cement Corp.

The Republic Cement Group is also affiliated with the French-owned Lafarge S.A. The Group has a 33 percent share of the market.

It has a capacity of 10 million tons a year, but its operating capacity at present is just 5.3 million tons with the rest mothballed.

Lafarge recently invested another P250 million in its Fortune Cement plant in Batangas to increase the plant’s capacity from 2,600 tons to 3,200 tons.

All in all, Lafarge has invested almost $1 billion for its five cement plants in the country.