DTI: Soaring cement prices "not normal"

The Department of Trade and Industry (DTI-7) downplayed speculations of cement price manipulation in the Philippines, saying the high cost of cement products these days are largely influenced by "other factors" other than the cartel.

However, DTI-7 regulatory division chief Carol Josh Ventura admitted that the skyrocketing prices of cement products now is "not normal."

"Supposedly, the price of cement should have gone down [in the last quarter of the year] because this is a lean period for construction. According to DTI monitoring, Feb-June is the peak period for construction," she said.

Ventura said DTI is considering other factors such as the soaring prices of oil and coal, which accounts for about 40-percent of a cement producer's variable cost, could be reasons for the high price of cement.

The price of cement now runs at P190- P200 per 40-kilogram bag.

She, however, refused to comment on speculations that there is a cartel in the cement manufacturing industry in the country, making cement end-users victims of a price monopoly.

"It is very difficult to prove that there is a cartel," said Ventura.

For his part, Wally Liu Jr., chief executive officer (CEO) of construction firm Primary Structures Corp. (PSC), is convinced that there is a cement monopoly and cartel not just in the country but in Asia.

But he agreed on Ventura's statement that the factors that affect the high cost of cement is the expensive operation cost cement production that is utilizing fuel, coal, and transportation.

"But this [price] should come down in time because the price of oil is also going down and the demand for cement is already going down," Liu said.

In an earlier report, price of cement is projected to increase by P20 within the year due to the rising costs of raw materials and other manufacturing inputs.

Based on the records released by the National Statistics Office (NSO), cement prices in the country rose three to five percent in the first half of this year.

The rate is slow compared with the 25-percent and 58 percent increase in Indonesia and in Vietnam, respectively.

Earlier, Ernesto Ordonez, president of the Cement Manufacturers Association of the Philippines (CMAP) said in the report that the industry was not able to increase prices to levels that would allow it to recover costs because of the small market in the country.

In the last eight years, until 2007, cement demand had been steady at 12 million metric tons a year.

In 2007, it rose to 13 million metric tons. The industry's production capacity is around 22 million metric tons a year, Ordoñez said.