Higher cement prices pose risk for robust construction sector

Increase in prices of cement as a result of the imposition of safeguard duty on imported cement is seen as the major risk that could put a break to the robust construction sector, one of the country’s property management firms warned.

In a press conference on the Philippine property market and outlook, KMC Savills Inc. Managing Director Michael McCullough and Research Manager Fredrick Rara both cited the 6 percent increase in construction cost last year driven by the 4 percent increase in cement.

“In the construction index, cement price is the biggest threat but we are okay as long this will remain in the short run,” Rara said.

The KMC Savills officials noted that the provisional safeguard measure of P8.40 per bag of imported cement took effect in the second week this month and is good for 200 days while the Tariff Commission is conducting a public hearing on the case could put further pressure on cement prices.

Should the Commission finding aligns with the DTI, then the provisional tariff measure becomes permanent and could stay for longer.

With more construction projects, there would be a need for more imported cement should the local cement manufacturers cannot cope up with the growth in demand.

Rara, however, said there is still good margins so both developers and consumers to absorb the 6 percent increase in construction prices in the short run or at least for a year, but could affect them if it would go longer.