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Egypt bans cement exports as regulator investigates sector - Daily News Egypt

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Egypt bans cement exports as regulator investigates sector

CAIRO: The Ministry of Trade and Industry on Sunday announced it would ban cement exports for four months as competition regulators investigate the sector. Cement prices have risen in Egypt despite recent attempts to ease them. Explanations, officials and analysts conjecture, could include a relatively lively construction sector, a lack of cheap imports and anti-competitive …


CAIRO: The Ministry of Trade and Industry on Sunday announced it would ban cement exports for four months as competition regulators investigate the sector.

Cement prices have risen in Egypt despite recent attempts to ease them. Explanations, officials and analysts conjecture, could include a relatively lively construction sector, a lack of cheap imports and anti-competitive practices among cement producers and sellers.

“Lately, developers and contractors were rushing to complete their projects to take advantage of lower steel prices, which declined by more than 50 percent since August 2008, said Ismail Sadek, a construction analyst at investment bank Beltone Financial. “This has created an upward pressure on cement consumption and prices.

Compared with last year, cement consumption in Egypt by volume was up 23 percent in January and 18.8 percent in February, he said.

The trade ministry, meanwhile, has signaled that demand and supply may not be the only factors contributing to lofty cement prices. While the export ban is in place, the Egyptian Competition Authority (ECA) will inspect the cement sector’s activities over the past six months, marking the second time the ECA has probed the sector, the trade ministry said in a statement.

We have taken several steps [in] the past few months to ensure that the price of cement on the domestic market stabilizes. However, the prices continued to rise for what seems like no specific reason pertaining to production or demand, said Trade Minister Rachid Mohamed Rachid in the statement. “Therefore, it was imperative for the ECA to step in and conduct a full investigation into the sector.

During the course of the ban, the ECA will analyze market dynamics, production capacity, and competition in the sector, the ministry said.

Last year, Egypt banned cement exports from the end of March to the beginning of October.

It is unlikely that the export ban will have a notable impact on local prices, Sadek said. “If you look at the statistics, out of total cement production in February, only one percent was exported, he said. “Simply speaking, demand is coming mainly from the local sector.

Owing to its relatively short shelf life, cement is generally harder to export than steel and other construction materials.

But an eventual slowdown in Egyptian construction could pull prices down, Sadek said. Construction, while slowing from its peak last year, is still at “the high end of the curve, he said. “We will see the tail of the curve around 2011, as most residential units are expected to be delivered at that time.

Saudi Arabia is also considering removing its own ban on cement exports, which has been in place since June 2008. Kingdom officials have previously said that the ban is temporary.

The lowering of this restriction could help ease prices here: Cement sells for about $55 per ton in Saudi Arabia, compared with LE 450 ($80) to LE 530 ($95) per ton in Egypt.

While firms such as Sinai Cement and Misr Beni Suef Cement are expected to increase their manufacturing capacity during this year, most of the firms that acquired production licenses in 2008 are not yet ready, meaning local production is not likely to see a major increase during 2009, Sadek said.

“We expect local cement production to jump from around 40 million tons in 2008 to around 48 million tons by end of 2009 and to 61 million tons by 2011, he said.

The Egyptian trade ministry also said Sunday that cement imports must clear customs within three days – it had previously taken 30 – in a further attempt to boost local supply.

Starting in 2006, the ECA began investigating price-fixing and other anti-competitive practices among cement-makers. As a result of the probe, a court fined 20 cement executives LE 10 million each last year.

Topics: FJP

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