What Should Be The Price Of Cement

This sets a minimum level of profitability of 13% of the value of fixed assets. Certainly the cost of cement varied depending on the plant, less profitable production of subsidized at the expense of more profitable – course in a market economy, this approach is unlikely. Equally important was the fact that the producers of cement in spite of seasonal fluctuations in demand had guaranteed sales to the face of a single customer – the State. It was necessary only to fulfill the production plan and deal only with production issues.

In this case, there was a powerful scientific-technical and industrial base to support the cement industry. The share of depreciation stood at 15% of the total cost of cement. For comparison, the current share of depreciation is at a level of 1%. According to Goskomstat cost of cement for three quarters of 2008 was about 2000 rubles (over the same period last year, about 1500 rubles per ton). Growth was more than 30%. If a cost (2000 rubles – $ 71) add the missing 14% Depreciation – $ 10 18% value-added tax – $ 13, and 13 “investment interest” – $ 39 (considering the fact that building a new cement plant at the rate of $ 300 per ton of production capacity) then the minimum attractive to investors, price is the figure of 133 U.S. dollars. In this case, do not forget the tax on profits, rising rates of bank loans and what is not seasonally adjusted all production facilities will be loaded, even after overcoming the crisis.

Importers are currently offering imported cement in the region of U.S. $ 100, this fact justifies the treatment of domestic manufacturers with a request to impose 30% of protective duties. The share of imported cement has reached 15% of total cement production in Russia, domestic refineries have been forced to reduce production by 6%. Question – how does a including taxes and freight ship cheaper foreign cement Russia is quite understandable – in the cost of cement is fixed costs such as depreciation of equipment, wages, and variable, a substantial part of which occupy about 30% energy. Fixed costs offset a certain amount of domestic consumption, in other words, each ton of “above-cement” costs 2 times more cheaply, and even if we did not bring more profit, will help significantly reduce costs and minimize losses. Using these circumstances foreign manufacturers are keeping domestic prices, have an opportunity to sell the surplus for outside their own country the dumping price. In the long run, capturing additional markets and weaken local producers likely chance of multiple recovery dumping. Such occurred in the 90 years in the U.S., when the Mexican cement was sold at 63% cheaper than the domestic market, the U.S. government was forced to introduce 60%! import duty on cement, and later it was reduced, but it lasted over 15 years.