Despite industry claims of low capacity utilization rate, the Philippines has the second highest price of cement in Asia, second only to Indonesia, data from the Board of Investments showed.

As of March 2010, data gathered by the BoI through the country’s Foreign Trade Service Corps Commercial Offices Trade and Investment Office and Bureau of Trade Regulation and Consumer Protection showed that Philippines cement is priced at $4.56 per 40 kilogram bag even if industry capacity utilization rate has been less than 60 percent. Poor capacity utilization rate indicates poor demand and could have translated to lower prices.

The Philippine price is a notch lower than Indonesia’s $4.62 per 40 kg bag of cement, followed by Japan with $4.32 and Malaysia with $3.90.

The cheapest source of cement among nine Asian countries is China at $2.44 per bag, which is a sharp drop from its 2008 price of $3.44.

Countries, however, with more expensive cement also posted the slowest increases since 2008.

The Philippine cement industry is controlled by the three global cement giants – Lafarge, Holcim and Lafarge – after they gobbled up local cement firms several years ago.

Notably, these three cement firms have manufacturing operations in all the three countries, except Japan, with the most expensive cement.

The three firms have been alleged to be running a cartel in countries where they operate.

In China where prices of cement are at its lowest among Asian countries, only Lafarge has cement investment there among the three global cement players.

In the Philippines alone, Lafarge has the biggest capacity of 8.522 million tons followed by Holcim with 5.435 million tons and Cemex with 5.07 million tons.

In terms of market share in the production volume, Lafarge accounts for 38 percent, Holcim with 25 percent and Cemex with 23 percent.

The remaining share is distributed among local cement firms like Northern Cement Corp. with 5 percent, Goodfound Cement Corp. with 2 percent, Pacific Cement Co. Inc. with 2 percent and Taiheyo Cement Philippines Inc. (Japanese) with 5 percent.,

The high cost of cement in the Philippines also comes with a poor industry capacity utilization rate.
BoI data gathered from the Cement Manufacturers Association of the Philippines showed the industry’s grinding capacity has reached only 52 percent in 2009 from 46.9 percent in 2008 and 46.2 percent in 2007. In terms of clinker capacity, CeMAP said the utilization rate was 59.20 percent in 2009, an improvement from the 54.15 percent rate in 2008 and 53.24 percent in 2007.

Even as the capacity utilization rate indicates low demand, local prices of cement have gone up to as high as P220 per bag in Luzon already.