While the offer by Mexican cement giant, Cemex, to acquire a majority stake in TCL may have grabbed the business news headlines in the last two months, there was another development in local cement distribution that is likely to provide benefits to users of the commodity.
That development was the entry into the local market of Rock Hard cement, which reports say is being imported into the region from as far away as Turkey.
The advent of Rock Hard cement, as direct competition for the local product from TCL, appears to have resulted in the Claxton Bay-based company lowering the price of a bag of cement from $55 to $48 until February 11, in what is being dubbed a Carnival sale.
The reduction in the price of cement would have come as a surprise to many builders, renovators and other users of cement who have experienced many years in which the price of cement produced by TCL has only headed in one direction...and that is up.
The fact that the price of the cement has been lowered in an adjustment caused by competitive realities is likely to place downward pressure on the commodity well beyond the expiration of the Carnival sale by TCL.
In fact, there is every likelihood that the cement prices could go lower as TCL and Rock Hard fight to maintain or acquire market share.
On a national level, such a compression in the price of cement is likely to mean a marginal but important reduction in the government's home and highway construction programmes as well as the necessary renovation work that must be done to ensure that public buildings are adequately maintained.
The reduction in the price of cement is also likely to be most welcomed by private users of the commodity.
This fight for the local cement market, which is being replicated throughout the southern Caribbean, has come at a time when the local construction sector remains "very subdued," according to the latest reading from the Central Bank in its January Monetary Policy Announcement.
Although T&T is at the start of the dry season-which is when most of the construction in this country is normally done-there is very little construction going on in the country. This is primarily because the local construction sector is largely dependent on spending by the government and the state-owned companies, both of which have postponed major projects as a result of the country's difficult fiscal situation.
Central Bank data indicate that in December domestic production of cement totalled 54,690 tonnes, while domestic sales of the commodity amounted to 31,725 tonnes-a figure that T&T has not experienced since February 2002, almost 15 years ago. In addition, the sale of cement in T&T at the end of December 2016, was about 35 per cent less than purchases of the commodity two years earlier.
This means that TCL and Rock Hard are fighting tooth and nail over a market that has contracted steadily over the last two years and is likely to contract even further as the government struggles to keep its fiscal house in order.
The questions that are likely to be uppermost in the minds of those who are concerned about the future price of cement include: How long will the cement price war last and what will be the nature of the industry at the end of the war?
The government also ought to be paying close and continuing attention to the issue of the quality of cement being sold on the local market, which is especially important for a country that is in the middle of an active earthquake zone.
This means that TCL and Rock Hard are fighting tooth and nail over a market that has contracted steadily over the last two years and is likely to contract even further as the government struggles to keep its fiscal house in order.
