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Supply shortage has cement prices rising in Vientiane
The price of cement in Vientiane is spiralling out of control as retailers continue to sell the product at prices higher than those approved by the Ministry of Commerce and Industry.
The issue is rampant as Vientiane continues to face cement shortages, despite the government approving the import of cement from neighbouring countries.
The price of green grade cement from a factory is 710,000 kip per tonne and retailers are permitted to sell it at 740,000-750,000 kip per tonne. The price of red grade cement from a factory is 780,000 kip per tonne and retailers are allowed to sell it at 810,000-820,000 kip per tonne.
In fact, many retailers are now selling green grade cement at 800,000 kip per tonne and red grade cement for 870,000 kip or 900,000 a tonne.
Ministry of Commerce and Industry's Domestic Trade Department Director General, Mr. Somphuang Phienphinith, told Vientiane Times yesterday the ministry has delegated Vientiane authorities and cement producer groups to monitor the market to avoid consumers being taken advantage of by trader s.
He said the ministry would only oversee macro-management of the market, despite the fact that cement is registered on the list of goods for which prices are controlled by the ministry.
The Vientiane Department of Commerce and Industry said it has sent officials to monitor cement traders but has failed to find any violating the ministry's rules and regulations.
Lao Cement Producer Group Secretary General, Mr. Inpone Phananoulack, accepted that some retailers are charging customers higher prices, but believed they would lower their prices once supply meets market demand.
“The demand for cement is very high this month,” he said. “We have produced cement at full capacity but we still cannot meet demand.”
The government recently allowed the import of cement from neighbouring countries with the aim of bolstering supply and minimising impacts on the construction sector.
Cement imports from neighbouring countries such as Thailand and Vietnam are estimated to be around 1,000 tonnes per day throughout the country.
Some 2,000 tonnes of cement a day can be brought into Vientiane up until the general election on April 30. However, this figure is still inadequate to meet demand.
Industry experts say the price of cement is out of control in many areas but believed that traders will only lower their prices when producers can meet demand.
The Lao economy has been growing rapidly over the past five or ten years driven by the inflow of foreign investment, stimulating higher demand for cement as the construction sector flourishes.
However, the total production capacity of the country's seven cement producers is only 1.55 million tonnes a year, enough to meet just 80 percent of total domestic demand.
In addition, many people build houses in the dry season, causing an increase in demand for cement at this time of the year.
vientiane times
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