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Wednesday, 16 September 2020

Cement oversupply crisis could force six producers out of Egypt by 2021

Supply glut could push six cement producers out of Egypt by next year, Lafarge boss says: As many as six cement producers could be forced to exit the Egyptian market by 2021 if the ongoing oversupply crisis doesn’t abate, Lafarge Egypt's CEO Solomon Baumgartner Aviles said during a webinar, Hapi Journal reports. Companies across the sector have been mired in crisis over the past several years amid increasing production costs and a prolonged oversupply crisis that has forced them to slash prices in a bid to stay afloat. With little being done to alleviate the situation, firms are now “on the edge of a precipice” and face collapse, Aviles said yesterday. The covid-19 pandemic and the government’s six-month ban construction permits has only intensified the downward pressure on demand, causing production to fall to record lows in May, he said, adding that demand is expected to fall 15% to 42 mn tonnes in 2020.

Calls for gov’t intervention: "Urgent decisions are required from the government, because unfortunately, if action is not done quickly, a number of companies may not be able to continue and bear more losses and are forced to close," Aviles said. He also suggested a proposal to set production quotas for companies linked to carbon emissions, to achieve the joint goals of reducing production and preserving the environment.

The glut has already hit several companies: National Cement, Tourah Cement, and El Nahda Cement have all either permanently or temporarily suspended production over the past two years, as new government-owned factories exacerbated the already serious supply crisis.

We took an in-depth look into the challenges facing the sector earlier this year.

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