Distributors of cement from Trinidad Cement Limited(TCL) are claiming large scale imports of Venezuelan cement even at lower prices would not significantly affect TCL's market share.
From August to September, Fidelity Investment Inc., a company with ties to the Guyana Fire, Life and General Insurance Co., (GuyFlag) Inc., imported 12,000 tonnes of Venezuelan cement. This is equal to the monthly demand for cement nation-wide. The Venezuelan cement by GuyFlag is being retailed for around $1000 while TCL is being retailed for $1140 and above. From July cement prices increased by $390 due to a shortage which forced consumers to stockpile the commodity.
But Andre Ramphal of Anral Investments Ltd says consumers prefer to buy the TCL brand because they are familiar with it and its quality.
Fidelity plans to import 10,000 to 15,000 tonnes per month but Ramphal says, "Our market can't take that amount."
He says there is an artificial demand at the moment because people are buying above their needs to guard against the perceived shortage. If a man needs 10 sacks he would stockpile 25 instead.
He believes that once TCL's production is running smoothly the Venezuelan cement will not make an impact and will only sell when TCL cannot meet the demand, as is the case now. By March 2005 an additional 9.4 million bags of TCL cement per annum should be available as a result of expansions at its Trinidad plant. The company is also building a bagging plant that will smooth out shortages due to shipping and other problems.
Joshua Safeek, chief executive officer of GuyFlag noted last Thursday that the Venezuela cement is selling as fast as it arrives. The company had 3000 tonnes of cement in stock at the Guyana National Shipping Corporation(GNSC) wharf on Thursday. Nevertheless, GuyFlag is set to supply the 30,000 tonnes or more that TCL is not yet supplying. In April, TCL officials noted that last year they supplied 128,000 tonnes of cement to Guyana but were told that total imports were in the vicinity of 160,000 tonnes.
Ramphal indicated that in the past when the company stocked Colombian or Venezuelan cement, these only sold after the TCL brand was finished.
Ramphal indicated that they increased their prices to over $1000 due to fuel and shipping increases. The further increase to over $1100 was due to shipment delays.
He says that the public can expect TCL cement to drop to around $1000 shortly. Currently Anral does not have cement in stock other than those already paid for. At Anral the working price of cement is $1140 but a shipment expected earlier this week was to sell for less, since there were no shipping delays, says Ramphal.
It is difficult to import a foreign product in light of consumer preference, he says, adding that consumers are also willing to pay higher prices for the TCL brand. "[Consumers are] offering to pay higher prices for a product they have the trust in."
Generally there is a high demand for TCL cement regionally and once hurricane -ravaged islands begin to recover, there is likely to be even greater demand. Ramphal says his company is trying to force a commitment from TCL to have adequate supplies.
Christopher Persaud, manager at Toolsie Persaud Ltd (TPL), explained that the increased supply of cement on the local market is better for the public price-wise, but the public still demands the TCL brand.
The demand for cement is strong, he says, but after TCL upgrades its operations in Trinidad, GuyFlag may find that their cement "will not sell as fast."
"There is adequate cement now in the market," Persaud says, adding that they currently have cement in stock for around $1100. He declined to say if in the near future their cement price would be below $1000 but did say it is likely to decrease or remain stable.
TPL has finalised arrangements with TCL for a 10% stake in the bagging terminal now under construction at the Guyana National Industrial Company(GNIC) Inc., wharf. The TCL group offered four local distributors including -Anral Investment Ltd., R & R Limited and another - a 40% stake in the bagging terminal. According to sources, the opening of the terminal may be delayed until next year, based on the rate of construction.
Tony Amres, of Readymix Concrete Ltd., believes that GuyFlag's supply of cement to the market is good for consumers. Due to the fluctuating prices and continued shortages he was forced to pre-purchase stocks.
"Once the monopoly is broken, the customer tends to benefit," Amres says. He estimates that his company will be able to save some 15% on production costs at GuyFlay's cement prices.
"Why would you buy a more expensive cement?" He believes that if GuyFlag maintains its supply at their current prices their cement will sell.
Readymix has bought GuyFlag's product and preliminary tests suggest that the cement is comparable in quality with TCL. Nevertheless, further tests are scheduled.
But Amres says GuyFlag's planned supply of 10,000 to 15,000 tonnes per month cannot be absorbed by Guyana since this is the projected demand for the entire country.
He adds that cement is a perishable commodity and has to be sold quickly.