Cement prices, like so many other things during this pandemic, have gone up, But how will it affect you and your money?

Caribbean Cement Company, better known as just Carib Cement started out the new year with a bang when they announced that the price of cement will go up by eight per cent.

The price increase was set to take effect on January 17 and would be the second round of increases for the country.  Carib Cement is currently Jamaica’s only provider of cement, so any price change is going to directly affect customers.

According to the company, the price increase was necessary due to the “immense” surge in the cost of electricity as well as the double-digit rise in the cost of raw materials and services. 

Similarly, Carib’s parent company, Trinidad Cement increased its prices by 15 percent.  Trinidad Cement is in turn owned by Mexican company, Cemex – Cemento Mexico.

Back in October, the CEO of Cemex, Fernando Gonzales, said that price increases are one of the ways that the company has been trying to combat inflation as well as rising costs of imports, oil, electricity etc. 

According to Carib Cement, its fuel and electricity costs have gone up by seven percent to over JMD$2.9 billion, which is almost US$19 million. 

Also, the price of WTI crude oil has gone up by 54 percent in the last year to roughly US$77 per barrel. AND the Jamaican dollar has depreciated by more than nine per cent to JMD$156.01 as of January 18.

As if that’s not enough, the Statistical Institute of Jamaica, STATIN, recently reported that the cost of goods and services have risen over 7 percent in the past twelve months. So, basically, the cost of doing business for Carib Cement has increased and they have adjusted their prices to reflect the change. 

So what does this mean for you and your money? 

Well, if you’re a regular person trying to add a bedroom to your house, it means that you’ll have to pay more per bag for your cement. 

Potential homeowners may also start to see the effect in the cost of housing as developers may adjust their prices to meet the higher cost of their raw materials. 

So the dream of owning your own home is about to get even more expensive.

For shareholders of Carib Cement, the news of the price increase has done little to shake the stock’s price, with the stock closing at $70.93 on January 19.

Now that is still a far cry from its price of well over $100 in November.  You may remember the controversy over this whole royalty issue.  Carib Cement’s stock price fell some 25 per cent in November after investors learnt that the company would have to start paying royalties to parent company Cemex to use its trademarks and other intellectual property.  Despite pushback, the majority shareholders approved the move in December.  This allows Cemex to receive payments of four percent on sales, which works out to be anywhere from $800 million to $1 billion yearly, even though minority shareholders – meaning everyone who’s invested via the Jamaica Stock Exchange and a few others – haven’t been paid any dividends in years!

At that time, financial analysts did not see the payments having any direct impact on customers and Carib Cement has not said that the payments contributed to its latest price increase. But of course they wouldn’t say that, right?

Is it time for another cement manufacturer to enter the game? Or for the government to open it up to other importers.  There will be cries about threats to Jamaican jobs if that happens, but maybe it’s time for some competition.