Aggressive growth in the value of construction has contributed to rising demand and prices for cement
Los Angeles, CA (PRWEB) January 02, 2015
Cement has a buyer power score of 2.8 out of 5, indicating that buyers have minimal negotiation power during the purchasing process. Cement is the main ingredient in concrete, which is an essential building material, so the product is well established within the market. As a result, there are few substitutes available for cement, and those that do exist can only replace a portion of the cement content when creating concrete. This low availability of substitutes severely restricts buyer power. Furthermore, the market is highly concentrated. According to IBISWorld research analyst Kiera Outlaw, “A slew of merger and acquisition activity during the past three years has further increased market share concentration, limiting the number of suppliers buyers have to choose from.” Buyers are also restricted to suppliers operating in their respective regions due to the high cost of transporting cement. These factors, in conjunction with increasing cement prices, have all contributed to diminished buyer power.
Fortunately for buyers, “the commoditized nature of cement has facilitated intense price-based competition among suppliers,” says Outlaw. “This nature allows buyers to base their purchasing decisions primarily on price, considering other supplier characteristics to a lesser extent. This nature has also led to low product specialization, so buyers are not limited to a select pool of suppliers for specific types of cement.” Moreover, low supply chain risk suggests that buyers are not often subject to supply disruptions or shortages. Current vendors include Cemex SAB, HeidelbergCement, Holcim Inc. and Lafarge North America.
Finally, price growth and volatility are expected to ease during the three years to 2017, which will help boost buyer power somewhat. However, buyers should still consider securing cement now rather than later because prices are expected to continue rising, albeit at a slower rate, during the next three years. For more information, visit IBISWorld’s Cement procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of cement. Cement is a mixture of various stones and metals that hardens when combined with water and is commonly used as a building material. There are a number of different types of cement available to buyers, including Portland cement and various blends of masonry cement and mortar cement. Buyers can purchase cement in bulk or in individual bags. This report excludes lime, a component of cement, and concrete, a product for which cement is a common input.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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