"The production cost will no doubt increase if fuel oil price is raised on April 1. But cement price also largely depends on the market mechanism. If the market competition remains tight we will choose not to raise our price," PT Semen Gresik President Director Dwi Soetjipto said here on Tuesday.
The company now sells cement in a 50-kg sack for Rp48,000-Rp50,000. However, the market price of the cement depends on its distributor, he said.
The fuel oil price hike will affect transportation and distribution costs the most as they make up 40 percent of the company`s overall fuel oil consumption, he said.
According to the preliminary calculation, the production cost will increase by 2 percent if the fuel oil price is to increase by an average of 30 percent, he said.
To cover the difference, the company is preparing two scenarios; to improve synergy with its two subsidiaries, Semen Padang and Tonasa, or to increase the use of low-calorie coal.
"Since early this year we have no longer used high-calorie coal. We only use low-and medium-calorie coal with a ratio of 40 percent to 60 percent. We hope the use of low-calorie coal will reach 100 percent," he said.
"Hopefully, the two scenarios will enable us to use energy as efficiently as possible and the cement price will remain unchanged," he said. (*)