Cement price hikes face weak demand and rising construction costs

Concrete Holdings Philippines (CHP) is considering phased cement price increases of P28-40/bag, potentially starting mid-November, citing higher fuel, coal and electricity costs. Hearn & Hearn likewise expects construction costs to rise through 4Q26 amid peso depreciation, elevated energy prices and wage adjustments.

We think CHP's proposed increases could cushion margins, although weak construction demand limits pricing power. At a 10% realized price increase, cement volumes could decline by 9.1% before revenue falls, assuming unchanged mix. Actual margin improvement will depend on input cost inflation and competitor pricing.

For property developers, higher cement prices add to broader construction cost pressures, particularly for projects still undergoing tendering or procurement. We think margins on presold units with fixed selling prices face greater exposure, while advance procurement and secured contractor quotations could provide some protection.

For cement, we would monitor realized selling prices, dispatch volumes and input costs before assuming earnings accretion. For property, we favor developers with secured construction budgets, pricing flexibility and manageable project pipelines. Weak building permits and infrastructure disbursements remain important demand signals for both sectors.

Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.

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