Disruption to cement distribution seen as cause of price hike

The price of cement in Vientiane remains high, even though about 16,000 tonnes have been imported since November to address the severe shortage in the capital.

According to the Vientiane Industry and Commerce Department, it has been necessary to import cement amid booming construction and the development of infrastructure.

But despite the additional supply of cement through imports, the current high price shows no sign of falling. At present, the retail price of green brand cement (P 3.25) in Vientiane is about 780,000 kip per tonne, while red brand cement (P5.25) sells for about 880,000 kip per tonne.

It is possible that the price will rise even higher when construction resumes next month after the Lunar New Year holiday ends as many foreign workers are currently taking a break and the industry has slowed somewhat.

The appropriate retail price of green brand cement should be 750,000 kip per tonne as the approved wholesale price is 710,000 kip, while the appropriate price of red brand cement should be 820,000 kip as the approved wholesale price is 780,000 kip per tonne.

Traders are recommended to make a profit of 30,000 to 40,000 kip per tonne of cement sold, according to cement factory officials.

Vientiane Times learnt that the rising price of cement is due to marketing problems experienced by cement factories, largely involving the distribution of cement from factory to market.

The Lao Cement Factory in Khammuan province, one of the largest cement factories in the country, said there is sufficient cement being produced in Laos to meet market demand.

The company said in a statement to the media that it has 20,000 tonnes of cement in its warehouse ready for shipment to Vientiane markets. The factory also has 100,000 tonnes of unpackaged cement, which will soon be ready for distribution.

When asked why the company did not distribute the cement to Vientiane given that it had large amounts in stora ge, Financial Controller Mr Namseng Sisomphou said yesterday the factory needed to improve its distribution mechanism to its sales agents to ensure a sufficient supply of cement to the market.

He also said the company had advised retailers in Vientiane to place purchase orders with the company directly if they could not obtain cement from sales agents. However, purchase orders must be for at least 20 tonnes in order to cover the cost of haulage from Khammuan province to Vientiane.

Mr Namseng advised retailers who did not require such a large amount to team up with other shops to place an order, so that the company could make a delivery of 20 tonnes.

The co mpany would deliver the cement within a few days of an order being received, he said.

By Times Reporters
(Latest Update January 28, 2012)