Cement Producers In Price Pow-Wow

01.08.2005
 

1 August 2005 

 

By Alfean Hardy

 

The country's major cement players - Lafarge Malayan Cement Bhd, Cement Industries of Malaysia Bhd (CIMA) and YTL Cement Bhd - and other smaller players were recently believed to be in the midst of high-level talks to forge a price equilibrium for the raw material.

 

The talks are seen as an effort to end a price war, which erupted at a time when there is overproduction within the industry. Past news reports said the price of cement jumped almost 50% overnight from RM117 per tonne to RM180 per tonne on June 30.

 

At this point in time, supply for clinker and cement, the two main components in the market, stands at 17.80 million tonnes and 28.30 million tonnes, respectively, with the recent average market price for the commodity at RM180 per tonne.

 

Cement, which is a controlled item, has a government ceiling price of RM198 per tonne on average. The final price of cement is determined by the distance it needs to be transported from the production/mixing facility.

 

The major players, when contacted by FinancialDaily, would not comment on the meetings. However, industry sources confirmed that there had been talks.

 

Meanwhile, another industry insider said cement buyers were not happy with the recent rise in the price of cement, which is deemed to be too rapid.

 

Cement company sources, on the other hand, said the price increase was welcome as it allowed the price of cement to stabilise to where it should be, that is, closer to the government ceiling price.

 

No one was willing to comment as to why the price has risen to the current level but, in a response to an email query, Cement and Concrete Association of Malaysia (C&CA) executive director Grace Okuda said: "All [our] members adhere to the ceiling prices set by the Government."

 

The C&CA represents Malayan Cement Industries Sdn Bhd, CIMA, Perak-Hanjoong Simen Sdn Bhd, Associated Pan Malaysia Sdn Bhd, Tasek Corporation Bhd, Slag Cement Sdn Bhd, Kedah Cement Holdings Bhd, Negeri Sembilan Cement Industries Sdn Bhd, Pahang Cement Sdn Bhd, Holcim (Malaysia) Sdn Bhd, Southern Cement Industries Sdn Bhd, CMS Cement Sdn Bhd, Sarawak Clinker Sdn Bhd, and Cement Industries (Sabah) Sdn Bhd.