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Monday, 22 July 2019

Is the government about to step in to resolve Egypt’s cement market glut?

Is the government about to step in to resolve the cement market glut? Prime Minister Moustafa Madbouly held a meeting yesterday with Trade and Industry Minister Amr Nassar and Medhat Stefanos, the chairman of the Federation of Egyptian Industries’ cement division, to look into the challenges facing the local cement industry, according to a Cabinet statement. The meeting saw the officials discuss proposals for how to address these challenges. While the statement did not make mention of the market being in oversupply, there have been concerns for the past few years that there is a cement glut, even with the recent real estate boom. El Nahda Cement and Tourah Portland Cement Company had both temporarily suspended operations, with the former specifically pointing the finger of blame at falling sales due to oversupply.

Specialized export subsidy program for cement: The government will be working on creating a specialized export subsidy program for cement exporters, and will also “encourage” Egyptian producers to land export agreements with African countries, according to the statement. It remains unclear what form this encouragement will take. Shuaa Securities had pointed to Africa in a note last week as a key market to grow Egypt’s cement exports and clear excess production from the local market, particularly as housing and infrastructure development in Sub-Saharan countries is picking up.

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