(Jamaica Observer) AMID the rising energy prices and falling margins, cement prices across the region have risen by double digits year-to-date as Trinidad Cement Limited’s (TCL’s) core markets continue their carbon dioxide emission reduction efforts.
The cost of construction material has continued to increase as supply chain disruptions worsened and raw materials spike. While oil (West Texas Intermediate) prices have abated from the US$120 per barrel highs seen earlier this month, they still trade around US$112, which is nearly 50 per cent higher than the US$75 seen at the start of the year. Steel prices have dropped below the May highs of US$783 while coal prices are up 162 per cent to US$394.
As a result, Trinidad and Tobago saw a 15 per cent price increase in cement prices in December, while it went up 12 per cent in Barbados in December and 11 per cent in Guyana recently.
“We obviously have seen our margins deteriorate from 2020 to 2021. We anticipate that the input costs will continue to go up, so we needed to take a decisive action in the increase of prices. We took the lead not only in the industry but in some of our markets in these price increases,” said TCL Managing Director, Francisco Aguilera Mendoza at the company’s virtual annual general meeting (AGM) held on Tuesday at its head office in Claxton Bay.
Caribbean Cement Company Limited, a subsidiary of TCL, raised cement prices by eight per cent on January 17 and by seven per cent on May 17. The company saw a 19 per cent rise in fuel and electricity costs to $1.25 billion and the introduction of a $133.86 million royalty payment to the ultimate parent, Cemex SAB de CV, in the first quarter. Mendoza explained that the company’s increases also would have factored in for the depreciation of the Jamaican dollar to the United States dollar. The foreign exchange rate has appreciated in recent weeks to $151.53 compared to the $155.08 at the start of the year.
“At the end of the day, the price increases have been done in pretty much all the geographies and it’s been driven primarily by the situation as these are unprecedented times that we’re experiencing. Obviously, this puts us in the position that we needed to increase prices to be able to maintain the value for our shareholders through our margins,” Mendoza added on the need to increase prices.
While there is an expectation that commodity prices will continue to rise, TCL believes that the Cemex network will be quite beneficial to navigating the murky waters. Carib Cement has produced 419.33 thousand metric tonnes of Vertua cement — a low-carbon, ready-mix cement — while TCL has produced 93.25 thousand metric tonnes of Vertua cement in Trinidad and Tobago.
This has reduced emission rates in Barbados, T&T and Jamaica by seven per cent in January to March quarter. Cemex aims to use 51 per cent alternative fuel by 2030 and move to a net zero production by 2050. Cement volumes were down two per cent in the South, Central America and Caribbean segment.