Lafarge and Cement Products Limited (CPL) have dismissed allegations that they are colluding, when setting prices for their products.
Last week, the two companies announced separate price reductions, a development some analysts claim points to collusion between the companies as a strategy to frustrate external competition.
Malawi Building and Civil- Engineering Allied Traders Association (Mabcata) Trustee, Patrick Khambadza, and the Malawi Polytechnic Dean of Built Environment, Rodrick Chilipunde, said the prices are likely to start going up again slowly in the short term.
Khambadza said the influx of cement on the market has led to price stabilisation.
“The industry has seen the coming of Cement Products Limited and the increased production of Akshar cement by Shayona. A number of vendors have also been given licences to import cement from Mozambique, Tanzania and Zambia. Today, the cement market is very competitive and prices have stabilised.
“The current price is now around $9 from $18 in 2012. This is a very good market situation considering the present energy deficiencies. This suggests that cement-based products will continue to be competitive and affordable to low income consumers,” he said.
In a separate interview, Chilipunde said cement manufacturers have been over pricing their products.
He said with the imported cement, local producers have no choice but to reduce their prices in order to be competitive.
“The price reduction is long overdue. Cement prices in Malawi are the highest in Africa,” he said.
Chilipunde also hinted that there could be collusion between the local companies.
CPL Chairperson, Aslam Gaffar, said the price reduction has nothing to do with collusion.
“There is nothing like collusion. How can we collude with companies that are importing the product?
“The price reduction is in effect because of market forces. With increased smuggled cement on the market and the government not helping us to address the issue, what else can we do rather than reducing the price to match with others?” he questioned.
He said CPL has an integrated plant and uses local raw materials in producing cement.
Responding to a questionnaire, Lafarge Chief Executive Officer, Albert Sigei, said unreasonable price action by any market player aimed at eliminating others would be illegal.
He said Lafarge believes that the existing vibrant and healthy competitive environment is good for cement industry since it encourages innovation and provision of the best service and prices to customers.
“We bel ieve that our customers, the government and other stakeholders are happy with any moves that make cement more affordable. Our price levels are comparable with those of other players in the market.
“The price reduction was at different levels depending on the market. The overall average price reduction was about five percent. We hope that all our trading customers will pass on this reduction to consumers so that, we can realise a higher consumption of cement,” Sigei said.
He said as a company, they review prices from time to time depending on the existing market conditions and cost factors.
“This round of price adjustment was part of this constant review aimed at ensuring that cement is affordable while maintaining sustainable and profitable business operations,” he said.
Today’s top business story: Top Commercial Banks In Malawi