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Wednesday, 23 September 2020

Cement demand on track to fall again in 2020

Two more signs the cement crisis is getting worse: Demand for cement is on track to drop to 45 mn tonnes in 2020, down from 49 mn tonnes last year, Arabian Cement CEO Sergio Alcantarilla said at a presser yesterday, according to Al Mal. While Alcantarilla did not offer a view on what’s driving the contraction this year, it is likely a result of a temporary slowdown in the real estate and construction industries due to the covid-19 pandemic, paired with the government’s six-month suspension of new construction permits. The onset of the virus has only aggravated a pre-existing supply crisis that has for the past few years forced companies to slash prices in a bid to stay afloat.

Improvements in global trade in July didn’t do much for exports: Egypt’s cement exports fell 12.5% to USD 14 mn in July, Al Shorouk reports, citing a report by the Export Council for Building Materials. This leaves exports during the first seven months of the year down 21% from the year before. Egypt’s traditional cement export markets including Yemen, Syria and Libya are currently in … disarray.

Background: The supply glut began in 2016 but was exacerbated when the state inaugurated a USD 1.1 bn cement factory in Beni Suef in 2018. Several factories have already suspended operations permanently such as the National Cement Company, while Tourah Cement and El Nahda Cement temporarily suspended their operations with six more on their way to leave the market. Market conditions have not put off Egyptian Cement, which is planning to inaugurate a EGP 4.5 bn cement factory in Sohag next year, CEO Ahmed Abou Hashima had said. We took a deep dive into the cement industry earlier this year, when prospects for the sector already looked bleak.

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