Cement prices hiked after removal of MRP 

• Companies boosting supplies with new measures

Cement manufacturers have decided to increase the price of a 50 kg bag of cement following the removal of the Maximum Retail Price (MRP), amidst a shortage countrywide.

The move came into effect on Saturday, while the Government has also allowed three local manufacturers to import 30,000 tons or 600,000 bags of 50 kg cement to the country.

Siam City Cement Lanka, producer of Sanstha and Mahaweli Marine brands, has decided to hike the price of a 50 kg bag by Rs. 177 to Rs. 1,275. 

Tokyo Cement (Company) Lanka PLC, manufacturer of Tokyo Super and Nippon Cement also said that a 50 kg bag of the aforementioned cement brands would be sold at Rs. 1,275.

Other companies have raised the price of a 50 kg cement bag to Rs. 1,375.

Following the price adjustments announced by the industry, State Minister of Cooperative Ser-vices, Marketing Development and Consumer Protec-tion Lasantha Alagi-yawanna said the cement companies which had increased the price to Rs. 1,375 had later promised to reduce the price by Rs. 100.

As per the manufacturers, shortages and delays in imported raw materials persisted due to intermittent operational shutdowns of supplier facilities and ports, a scarcity of vessels and other supply chain challenges arising out of the pandemic.

“The fuel price increase and unavailability of vessels escalated inbound freight rates by over 300% within a very short period. Further, considerable delays occurred in opening LCs with the banks, wherein a process that typically happened on the same day now takes several weeks,” Tokyo Cement said.

It added that the cost of clinker continued to increase in line with coal prices, as demand outstripped supply. “The value of the Sri Lankan Rupee depreciated when compared to the same period last year, compounding upon sharp price hikes of imported raw materials including clinker and paper for bags,” Tokyo Cement said.

INSEE Cement Chief Executive Officer Gustavo Navarro recently said the domestic market was experiencing an artificial scarcity that was first created by importers refusing to release their stocks to the market.

“Unfortunately, now they are struggling to revive the interrupted supply chain due to cement exporters struggling to meet the demand in their own countries. Therefore, today, even with the Government lifting controlled pricing, we have a shortage of cement imports to Sri Lanka. INSEE is once again stepping up to meet this challenge by introducing two more additional import vessels to our logistics operation,” he added.

INSEE Cement, currently operating at a 3.6-million-ton maximum production and import capacity, has added two more shipping vessels to its import logistics operation, addressing the ongoing product shortage in the local market.

To avoid a shortage in the market, Tokyo Cement intends to supplement local production with importation of finished cement until additional local production capacity comes online.

“Tokyo Cement is operating its cement manufacturing plant in Trincomalee at the maximum installed capacity of around 170,000 MT per month and will continue to supply cement islandwide at the highest output levels,” Chairman Dr. Harsha Cabral PC said in a statement recently.

He also said that on a request made by the Government, Tokyo Cement had made special arrangements to import an additional 12,000 MT of cement per month as an immediate contingency measure to alleviate the cement shortage currently prevailing in the market.

The company will be laying the foundation for the new factory expansion in early November, to increase manufacturing capacity by a further one million metric tons by early 2023. The expansion of the Tokyo Cement Colombo Terminal slated to be operational in the upcoming quarter will increase the company’s bulk importation, packaging, and distribution capacity to over one million metric tons.