How come cement prices have gone up from less than $800 sack a year ago to well over $1000 when main supplier TCL has only increased its price by US one dollar per metric tonne or G$7.16 per sack (from June)?
Some are saying the increases are caused by hoarding as retailers take advantage of shortages while essentially paying the same price.
Cement prices in July, increased from $860 to $960 and by mid-July and into August prices reached over $1000. They are currently $1150 to $1320 per sack, on average. Last week cement was retailing for $1040 per sack. From June 2003 to July 12 the cement prices increased by 23%.
One buyer says some large retailers tell customers there is no cement available but in many instances a third party would have large stocks available at exorbitant prices.
This large user of cement noted that importers are retailing cement at one price but persons who are sold wholesale quantities from these same importers, retail for another price.
Manzoor Nadir, Minister of Tourism, Industry and Commerce explained on Monday that supplies as they are now are insufficient to supply the demand.
Guyana utilizes 12,000 tonnes of cement monthly. "Clearly there is a shortage," says Nadir. He was asked if the hoarding of cement was still widespread and he noted that one indication of hoarding would be the variation of prices. In April, the ministry accused some retailers of hoarding cement and selling it for $1,500 to $1,800 a sack.
In July, one distributor of TCL cement had noted that they were struggling to keep prices low and might have had to lay off staff if the cement supply does not improve. The distributors say that freight charges have increased by US$300 per container and that may be behind increases.
Large users of cement are still stockpiling and pre-buying large quantities of cement. Extra-regional cement imports have still not reached the capacity to ease the shortage.
Anral Investment Ltd, Toolsie Persaud Ltd., and R&R International Limited are the major distributors of TCL cement.
These distributors were offered a 40% stake in the TCL cement terminal now under construction at Guyana National Industrial Company Inc. The terminal is expected to ease the shortage. Negotiations are ongoing with these distributors and TCL.
By March 2005 an additional 9,400,000 bags of cement per annum should be available as a result of expansion at TCL's plant in Trinidad.