Posted on 30 Jul 2008
On Monday, Lafarge Malayan Cement Bhd, which controls about
40% of the local cement market, said it would raise the prices of its cement
products by RM20 per tonne from Aug 1.
Industry analysts said the latest price increase would
translate into a new average selling price of about RM277 per tonne for cement
in
They expect further hikes in cement price this year, given
strong indications that other local players like YTL Cement Bhd, Tasek Cement
Bhd and Cement Industries of Malaysia Bhd would soon emulate Lafarge's move to
offset the recent 26% rise in electricity tariff and 63% jump in diesel price.
An analyst with a foreign brokerage told StarBiz the local
cement industry was an oligopoly dominated by four large players.
a€?Cement constitutes about 50% of raw material costs or about
20% of total construction cost. I believe every 10% increase in cement price
will increase property development cost by 2%,a€? the analyst said.
CIMB Research said in its report yesterday that the price
hike by Lafarge was not surprising, as cement companies would have to raise
their selling prices following higher operational costs.
Despite the anticipated slowdown in construction, the
research unit said it did not expect the price increase to dent demand in the
short term.
However, CIMB Research is cautious on the long-term outlook,
given delays in construction projects and a slowdown in the property sector.
It also expects a lower risk of imports due to the revised
selling price that is on par with regional prices.
This will give local suppliers an edge over imports in terms
of storage, quality and shelf life of the products.
Aseambankers said Lafarge's revised selling price of about
RM275 per tonne in August was comparable to the price of efficient cement
producers in
It said the quantum of Lafarge's price hike was sufficient
to offset its higher cost but a€?the main concern is on the price of coala€?.
Coal spot price based on
Lafarge is set to review its cement prices by year-end.
a€?They will possibly be higher if prices of raw materials and fuel continue to
escalate,a€? said the research unit.
