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Sri Lankan cement crisis continues

World Cement,

There is a reported shortage of 1 million 50 kg bags/month of cement in Sri Lanka, as price controls limit supplies and threaten the island's construction sector.

It is all quite reminiscent of the 'closed economy' days of 1970s, when shortages in materials and even food created by price controls, were common. Recently, one state agency got into a controversy for importing substandard cement.

"At the moment we can estimate that there are about Rs.1 billion worth of contracts being carried out," Rohan Karunaratne, President of the Ceylon Institute of Builders, is quoted as saying.

"The imports by the government are inadequate. On average the government imports range around 200 000 bags/month and this is even less than 20% of the required amount. We met [recently] with the Chairman of the Sri Lanka Cement Corporation …  and stressed that around 1 million bags are needed urgently to offset the shortage," he added.

Amid a weakening dollar that has sent most commodities rising to new highs, global cement prices have risen. Energy, key for producing cement, is also high.

According to local news reports, Holcim Lanka and Tokyo Cement, the local producers in Sri Lanka, can only supply 60% of the market. However, a significant part of Holcim's production and almost all of Tokyo cement is made by grinding imported clinker.

Cement firms have requested Sri Lanka's Consumer Affairs Authority to increase retail price of cement to Rs.785/50 kg bag. But the agency and consumer affairs minister Johnston Fernando has rejected the price increase.

Additionally, reports suggest that suppliers from countries such as Pakistan, where the bulk of Sri Lanka's cement is imported, have 'better offers' from other countries.

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