The Russian-Ukrainian war deepened the sorrows of the cement manufacturers in Egypt – who are already in crisis – as a result of pressures related to oil prices and the difficulties of importing raw materials and spare parts.
“After the Ukraine war, the price of coal that we import rose from $60 per ton to more than $300, and the paper used for packaging increased by 40%, in addition to the difficulties of importing them, and the same is true of spare parts and other raw materials,” according to what Carlos Gonzalez said, Chairman of the Board of Directors of Assiut Cement Company, and President of CEMEX Egypt and the UAE, on Sunday at a press conference in Cairo today.
Assiut Cement Company – which was acquired by Mexican CEMEX in 1999 – suffers from the large increase in supply in the Egyptian market, which led to losses in most of the companies operating in the sector. The production capacity of cement companies in Egypt reaches more than 80 million tons per year, while sales range between 48 and 50 million tons, according to data from the Cement Division of the Chamber of the Federation of Egyptian Industries.
Twenty-three cement manufacturers in Egypt agreed to reduce production to reduce excess supply, for a period of one year since last July, following obtaining the approval of the Competition Protection Authority.
“Companies were unable to benefit from the decision [بتخفيض الإنتاج]After it hit, the Omicron crisis, and then the Ukraine war, which raised costs significantly,” Gonzalez said.
CEMEX accounts for regarding 8% of the cement market in Egypt, with a production capacity of regarding 5.7 million tons, and sales last year of 3.7 million tons, and it expects sales between 3.7 and 4 million tons in 2022, according to Gonzalez.
Cemex had closed one of its production lines in its factory in Egypt in 2017, as a result of pressures related to oversupply, according to Gonzalez, who added that “a third” of the companies operating in the sector would have closed had it not been for the decision to cut production.
price increase
He pointed out that his company has raised selling prices by regarding EGP 100 since last February, bringing the price of a ton of cement delivered on factory land to regarding EGP 1,100 ($59).
“Despite this increase in prices, it did not cover the increase in costs or compensate for the losses incurred in the past years. We are only trying to absorb the increase in energy and raw materials, and we cannot pass all the increase to the consumer,” Gonzalez said.
He pointed out that the company is currently trying to use diesel as a fuel in its factories because it is cheaper, but “mazut is used in many industries in Egypt, as well as power stations, and therefore it is not available in the required quantities, and if we do not find the quantities we need, we will have to import the most expensive coal.”
He added, “The Ukraine crisis has not only raised costs, but also the problem with the availability of raw materials and spare parts, the ability to provide cheaper fuel, amid supply chain crises and shipping difficulties, and all of these factors will have an impact on prices.”
“The question now is who will be able to continue under these circumstances, and we certainly hope that the war will end, and this will solve many problems.”
(Prepared by: Abdel Qader Ramadan)
(Editing: Ahmed Fatiha, contact: ahmed.feteha@refinitiv.com)
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