BY IRMA ISIP
[ Malaya.com.ph ] January 6, 2010
The Department of Trade and Industry (DTI) said it will impose price control on cement in the wake of reports of overpricing by as much as P65 and hoarding.
Trade Secretary Peter B. Favila said this drastic measure would be resorted to if the market will continue to experience cement shortage and overpricing.
Favila said the DTI has served 150 notices of violation (NOV) and 50 notices of no supply (NNS) during recent market visits last December 28 and January 4 where one retailer was found to be selling at P270 per 40-kilogtam bag when the suggested retail price has been pegged at P205.
Cement manufacturers will not also be spared by DTI which has asked them to submit by Thursday the official receipts of cement pick ups from their plants, the price, as well as delivery receipts.
Trade Undersecretary for consumer welfare Zenaida C. Maglaya explained that if price control will be implemented, it will be done at three levels – manufacturers, distributors and retailers to prevent the three sectors from finger pointing on cause of the problem.
"We have asked from retailers issued with NOV and NNS why their selling prices are high and why they have no supply. These will be checked with submission from manufacturers and distributors," Maglaya said.
Those found overpricing their products will be charged with profiteering which carries a maximum fine of P2 million. Hoarding on the other hand can be slapped with P2 million with imprisonment.
The DTI has been informed by manufacturers that prices of cement at retail is P205 for Cemex, P208 for La Farge and P210 for Holcim.
Ernesto Ordonez, president of the Cement Manufacturers of the Philippines (CeMAP) blamed retailers for overpricing and hoarding of cement in the market.
To police its ranks, CeMAP would cut off supply to retailers found to have overpriced their products.
Ordonez confirmed DTI’s monitoring, saying some are selling at as much as P260 per bag.
Other outlets are hoarding but would sell at higher prices. Some are holding supply in anticipation of higher demand as construction season sets in and may spur a price hike.
Ordonez said this problem is compounded by the already tight supply in certain parts of Luzon due to slow deliveries.
Ordonez said delivery of La Farge’s Republic Cement in Batangas as of Monday was still down to less than 10 trucks from the usual 150 trucks due to the damaged "Bridge of Promise." Trucks are queuing up for delivery scheduled.
Ordonez said he is also personally going from hardware store to hardware store and has found deliveries slow.
He said he has uncovered overpricing from an unidentified retail store which was selling at P215 last December 15, P240 last December 20 and P260 last January 4.
While ex-plant prices vary, dealers have a margin of P2 while retailers take a P10 to P15 margin, according to Ordonez.
At pickup, Holcim and Cemex sell at a low of P195.
Only Lafarge raised its price at P3 to P208 per bag.
Ordonez is calling on cement companies to look into dealers and retailers even if they don’t have control over them.
The DTI was expecting normal supply in areas affected should have resumed last December 23 after the maintenance works shall have been completed.
The areas facing supply problems were Cavite, Bulacan and Rizal due to the shutdown of three plants -- a Cemex plant in Antipolo and Holcim and La Farge plants in Norzagaray.
The "Bridge of Promise" in Batangas was damaged by typhoon Santi, reducing the delivery of Republic Cement plant from 60,000 bags to 20,000 bags per day.
Ordonez said CeMAP members have submitted to the DTI before the new year copies of their accredited outlets to trace the origin of the price hike.
Surge in demand was noticed in December when homeowners started repairing homes destroyed by the recent typhoons. The surge coincided with the annual maintenance shutdown of some cement plants in Bulacan.
The industry is awash with capacity. Combined, the 15 factories now have a registered capacity of 23 million metric tons. But demand as of 2008 stood only at 13.2 mmt or just 57 percent of the registered capacity.
There are three independent cement companies namely Taiheyo Cement, Northern Cement Corp. and Surigao-based Pacific Cement. Lafarge, the biggest in terms of capacity has six factories while Holcim, the biggest in terms of sales has four. Cemex has two plants.
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