HIGH inventory levels racked up as a result of weak domestic demand coupled with the presence of “dumped cement” has forced Caribbean Cement Company to stop making clinker through its main manufacturing line at its Rockfort, Kingston plant.
Late last week, the cement manufacturer informed the Jamaica Stock Exchange (JSE), on which it is listed, that it “has taken its new Kiln 5 clinker manufacturing line out of service for a repair job that has arisen and has decided to extend the downtime of the plant beyond that required, to a total of 40 days”.
“This is in order to reduce the high inventories that it is carrying of both clinker and cement,” said the statement to the JSE. “Despite an extensive programme of export activities, the current depressed domestic market and the presence of dumped imported product have resulted in lower than expected plant utilisation and a build-up in inventories.”
Carib Cement managed to more than double its export of cement during the first six months of 2010, increasing its sales to overseas markets from 38,552 tonnes during the comparative period of 2009 to 89,083 tonnes during the June 2010 quarter.
Clinker exports, on the other hand, fell from 80,125 tonnes to 27,457 tonnes over the 12-month period.
Meanwhile, domestic sales of cement plummeted from 343,863 tonnes to 292, 876 tonnes.
“Jamaica’s cement demand has been in decline over the last three years and sales this year have plummeted by 20 per cenmt as a result of the deteriorating economic conditions,” the release continued. “The contraction in sales has been exacerbated by the recent violence and the ensuing state of emergency in the Kingston area. At the same time, cement traded at less than fair value has been entering Jamaica from the Dominican Republic and the USA, the latter with applicable duties waived.”
According to Carib Cement, the Anti-Dumping and Subsidies Commission recently assessed the dumping margin of the cement from the USA as 59.72 per cent and that from the Dominican Republic as 50.90 per cent.
The Company’s General Manager, Anthony Haynes, has indicated that the suspension of the kiln operations will in no way impact supplies to the local market, as current inventories provide more than four months’ cover.
“This decision will not impact in any way the availability of cement in all of our markets as the company will continue with its cement grinding activities,” added the release.
The suspension of this part of the operations will significantly reduce its energy costs over the period and improve the company’s cash flows. Employees who work in that area of the plant will be proceeding on leave over the period.
The company’s recently completed US$177m expansion and modernisation programme increased its cement manufacturing capacity to 1.8m tonnes per annum.
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