A SHARP hike in cement prices in Johor has sparked fears in the construction sector of an overall rise in building materials in other parts of the country.

Manufacturers have so far remained tight-lipped on what has caused the price of cement to rise by 1.5 times in just a few weeks, said Master Builders Association of Malaysia (MBAM) President Foo Chek Lee.

“We have now received a lot of complaints. Not only in Johor,” Foo told The Malaysian Insight.

He said the hike in cement prices will not be confined to Johor, and will soon be a nationwide problem.

Construction companies in Johor were notified by cement factories last month that the price of cement would jump by 50% to RM295, from RM200 per metric tonne.

The sudden hike in prices could also be attributed to the shortage of supply due to temporary closure of plants for maintenance work.

Foo said MBAM would hold a meeting with manufacturers to solve the pricing issue.

“We also understand that they (cement producers) are also facing losses. I believe that it involves supply issues,” he said, adding that the group would meet soon to get some clarification.

Johor Chinese Builders Association president Tee See Kim said the price increase was too sudden, and industry players were not given a long enough grace period to adjust to the price increase.

“The hike is usually by 10% to 20% at most, and it takes about 3 months to adjust to the pricing. But now the price has gone up by 50% and we only have 2 to 3 weeks to adjust.

“It’s not that we can’t adjust to the hike, but it should be reasonable and based on the principle of “supply and demand”. Otherwise, it will result in serious losses for projects that have just started,” he said.

Tee said the cost will be passed on to consumers in turn resulting in an increase in property prices.

He told The Malaysian Insight that the hike in prices could be related to recent acquisitions by cement companies, which have reduced competition.

YTL Cement Bhd, a subsidiary of YTL Corp Bhd, recently acquired from Associated International Cement Ltd (AICL) a 51% stake in Lafarge Malaysia for RM1.63 billion, or 433.34 million shares at RM3.75 per share.

The acquisition triggered a mandatory general offer for the remaining shares that are already not owned by YTL Cement.

On Thursday, it increased its shareholding in Lafarge to 77%.

Meanwhile, Hong Leong Group has launched an unconditional voluntary takeover of Tasek Corp Bhd, to take the company private.

Hong Leong which has an 80.8% stake in Tasek has offered to buy out minority shareholders in the company at RM5.50per unit. – June 15, 2019.