Now these two companies offer their products for the same prices. Theoretically these two oligopolies may have arranged the price together so as to get more profit. We asked head of “Ararat Cement”, Sedrak Arustamyan, who said that it was not so and the prices were regulated only by the market, i.e. the prices were formed on the basis of the demand and supply capacities. 11 months ago “Ararat Cement” offered one ton of cement for 23.000 dram, now this price has been increased up to 33.000. According to S. Arustamyan the reason for this increase is the fact that the spare parts they buy for organizing their production cost more expensive now. These spare parts are thick metallic things, which can resist 1400-1600 C temperature and are bought from Russia and Ukraine. Before there used to be such materials in Armenia, but now these parts are imported from abroad. According to S. Arustamyan they have to replace these materials twice per year, and each time they do this they have to spend $3-4 million. S. Arustamyan doesn’t agree with the rumors claiming that the prices were artificially increased in order to make more money in parallel to the growth of construction capacities in Armenia. According to him, “Ararat Cement” exports most of its production (last year the total production capacity of this factory covered 460.000 tones, 250.000 out of which was exported to Georgia, Iraq and Iran). As for M. Baghdasarov, he says that their export capacity will be increased by 30% this year.
Of course the market price differs from the whole sale prices and is about 34-40.000 dram. “Ararat Cement” sells only big quantities and doesn’t regulate the market prices.
Armenian companies offer comparatively lower prices for cement. According to S. Arustamyan the prices for cement are as the following in our neighboring countries: Azerbaijan – 120-130, Georgia – 95-100, Iran – 120-140, Russia – 110-115 and in European countries 130 Euros for one tone.
How much will the prices increase in case gas and electricity prices increase? S. Arustamyan couldn’t answer to this question because their factory hadn’t calculated any prices yet. As for M. Baghdasarov, recently he announced that though the prices for their product would be increased, their production and export would not suffer either because in parallel to this increase as well as the prices in our neighboring countries would be increased. Concerning this increase M. Baghdasarov said, “Cement has always been cheaper in Armenia than in our neighboring countries. We can’t keep the prices down because they will come and buy the whole capacity and will not leave anything for Armenia. Now the demand is so high that our factories are not able to meet it fully. Iran, Iraq and Georgia buy much cement from us”.
Currently, these two Armenian cement companies make good profit. It’s strange but in 2005 “Mika Cement” used to fill the 292th place in the list of Armenian biggest taxpayers. The profit of “Ararat Cement” covered 505 million dram last year. According to S. Arustamyan their factory has never had losses, it has always worked with profit. By the way, at first “Ararat Cement” entered the market offering low prices. “This was done for the purpose to show the high quality of our product inside and outside of Armenia”, explains Arustamyan. We hope these productions will keep the quality of cement good and will not use the opportunity that they don’t have any competitors in the market and will not increase the prices. They should remember the “golden rule” of business: businessmen succeed thanks to consumers.