CEMENT producers have been caught off-guard by rapid growth in demand over the past year and SA may face a shortage of cement by 2007.

Tuesday, 09 March 2004 02:00

Aveng shakes up Grinaker as income drops

Rand's gains take heavy toll on group

Tuesday, 03 February 2004 02:00

No agenda behind rebranding of Alpha

Alpha, one of SA's three largest cement producers, says its R29m rebranding exercise is not indicative of intentions by its largest shareholder to up its stake in the South African company

Pretoria - The Competition Commission would look into price increases by cement makers, due to come into effect next year, if concerns were expressed about them, it said at the weekend. 


Construction IndustryThe commission's comments follow complaints by some buyers that the three biggest cement producers in the country - PPC, Alpha and Lafarge - had notified them of price increases above 20 percent from next year.

Peter Lord, the owner and chairman of concrete product manufacturers Echo Floor, Echo Prestress and Fastfloor, said: 'I don't know how they can justify it. PPC has just announced a 45 percent increase in attributable profit.

'What is a surprise is that the cement cartel was abolished in 1996 but cement manufacturers seem to be acting in concert.

'They're all talking about the same increase, which seems remarkable, and all have come up with the same reasons at exactly the same time. I understood that was anti-competitive.'

Peter Nelson, PPC's financial director, described suggestions that its cement prices would increase by more than 20 percent next year as nonsense.

'Normally, we have two price rises in a year and take into account cost inputs and what is happening in the market. It has been a responsible approach and our price increases have been around the producer price index and inflation mark.

'Obviously the currency has also impacted on the cost of fuel and imported consumables.'

Geoff Parr, the chief economist at the Competition Commission, said the commission normally responded to a complaint submitted to it by somebody affected by price rises or collusion.

But provisions of the Competition Act with regard to restrictive practices allowed the commission to initiate a complaint.

'If there is concern, we will look into it. It's too early to tell if price increases are excessive and we aren't aware that they will all be implemented simultaneously and of any collusion.'

Parr added that it had been reported that many of the cement manufacturers' customers were on long-term contracts and increases of 20 percent to 30 percent were 'not so bad if prices were set many years ago'.

Friday, 01 November 2002 02:00

Cement price hikes 'hurt building sector'.

Members of the building industry are reeling from the shock of a proposed 20% hike in the price of cement. This follows a double digit price rise in the past year.

Construction IndustryThe proposed price rise is likely to lead to a substantial increase in building costs. Stellenbosch University's Bureau for Economic Research (BER) warned yesterday that, together with higher interest rates, a weighty rise in the price of cement would contribute to building work being less affordable and would lead to a slowdown in demand.

Ultimately, this will have a negative effect on the economy.

Cement producers PPC, Alpha and Lafarge would not comment on what their price hikes would be yesterday. However, a number of concrete product manufacturers have said that PPC, for one, had indicated a 20% price rise in January.

The rise would not be applicable to all clients, because prices vary between clients and cement product types, but double-digit rises were expected all round.

The BER's Charles Martin said cement sales were on the rise for the first time in years, and that now would be considered an ideal time for cement producers to introduce substantial price hikes.

PPC and Alpha said their price hikes were based mainly on increases in their input costs, which were affected by the depreciation of the rand. Capital equipment and spares, for instance, were sourced mostly from the US and Europe.

PPC also fingered Spoornet's prices and inefficiency as contributing factors to rising cement prices. Colin Jones of PPC said problems with rail availability had forced the cement producer to switch to more expensive road transport in some instances.

PPC and Alpha said price shifts were not based on attempts to come in line with international pricing or to move towards import parity pricing.

Lafarge declined to comment on price strategy issues.

The cement buyers said the reasons given for the increases were reasonable, but 20% was beyond what could be justified.

Several cement buyers have also accused producers of continuing to operate in a cartellike fashion. PPC, Alpha and Blue Circle operated as a cartel until 1996, when it was officially disbanded. A price war ensued in an attempt by the producers to secure market share.

 

Most Popular

Investec Property Fund launches first REIT sustainability-linked ESG bond in Africa

Apr 22, 2021
Darryl_Mayers_CEO
Investec Property Fund (‘IPF’ or ‘the Fund’) today became the first South African real…

‘SAIBPP Connect – A Networking Game Changer’

Apr 09, 2021
Vuyiswa_Ramokgopa_SAIBPP
On the 31st of March, SAIBPP is launching SAIBPP Connect, an online platform geared…

EPP’s new app takes tenant relations to the next level

Apr 22, 2021
Tomasz_Trzósło
Johannesburg Stock Exchange listed EPP, Poland’s biggest retail landlord, continues to…

Rethinking office space in post pandemic SA

Apr 20, 2021
90_Rivonia_results
Since the beginning of the pandemic, one of the biggest questions in real estate has been…

4 simple rules to getting a good credit score

Apr 21, 2021
Carl_Coetzee_BetterBond_CEO
Make buying your dream home an informed purchase by knowing your credit score.

Please publish modules in offcanvas position.