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Cement shortage due to post war construction

02 Sep 2011 - {{hitsCtrl.values.hits}}

Increased demand from a booming construction industry in post war Sri Lanka has resulted in a severe cement shortage in the country.

Projects are in danger of slowing down as private sector and the Sri Lankan government struggle to fill cement shortages in the country's 2.2 billion U.S. dollar industry.

Last month the government ordered imports to offset the shortage but the cement is yet to be released into the market after the Sri Lanka Standards Institution (SLSI) pronounced them to be of inferior quality. This sparked off a tense standoff between the Cooperatives and Internal Trade Ministry that imported the cement and the SLSI, which insisted testing should be done before the stocks are released to the market.

An irate Cooperatives and Internal Trade Minister Johnston Fernando was seen publicly criticizing the SLSI for not releasing the cement and has called on the Science and Technology Minister, under whose authority the SLSI operates, to take disciplinary action against the officials that have prevented the cement from being released onto the market.

The SLSI officials have maintained that they are simply doing their job and looking out for the consumer.

Lucky Cement,a Pakistan company, has brought 14,000 bags into the country but cannot release it into the market until samples are checked. However they have received certification from a laboratory in London and the SLSI has agreed to conduct spot checks on any future shipments. Nonetheless it would be at least a week more before the supplies are released.

Industry experts insist that the stocks imported by the government are inadequate. Ceylon Institute of Builders President Rohan Karunaratne has called for more imports and discouraged measures to increase cement prices.

Importers point to high prices in the world market as a reason for the shortage and insist that prices should be increased by 3 U. S. dollars to remain competitive.

Pakistan and India are Sri Lanka's main cement suppliers but of late they have found more lucrative offers elsewhere. Karunaratne has speculated that the increased building for the 2012 Olympics among other events could be the reason for the increased demand. Other experts have pointed out that demand peaks during the August and September months but usually dips towards November.

The Consumer Affairs Authority is powered to control prices of essential goods in Sri Lanka including cement. Several importers have already appealed to it to allow them to increase the optimum price of cement but the decision is still pending.

Meanwhile Tokyo Cement and Holcim Cement that are the only two companies in Sri Lanka to manufacture the product stress that they are producing at maximum level and cannot increase output to bridge the shortage.

An official from Tokyo Cement expressed hope that the upcoming north-east monsoon would reduce construction and by extension the shortage. "This is more a supply shortage than a demand driven shortage," he explained adding that buffer stocks were low in the run up to the peak months causing the crisis."

Demand for cement has grown sharply in tandem with a pickup in construction. In the first quarter the construction sector's GDP had grown by 14.3 percent in comparison to 8.5 percent in the corresponding period of last year.

The Census and Statistics Department of Sri Lanka also said the total cement production increased from 903,711 Mt to 1,070,945 Mt indicating 18.5 percent increase year on year. The imported building materials quantity index increased from 178.6 in the first quarter of 2010 to 191.6 over the same period of 2011 indicating a 7.3 percent increase.

As per Central Bank data, local cement production in the first five months had increased by 17 percent to 803,000 tons. Imports had increased by 18.3 percent to 897,000 tons. The combined effect is that total cement market had increased by 17.6 percent to 1.7 million tons.

These high numbers are on the back of a rebound in 2010 in the construction industry and cement sub sectors. The construction sector expanded significantly by 9.3 percent in value added terms in 2010 compared to a lower growth of 5.6 percent in 2009. Cement availability grew by 18 percent in 2010 compared to a contraction of 11 percent in the previous year.(Xinhua)

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Cement shortage due to post war construction

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