By: Mostafa Adel and Fahd Omran
Cairo – Mubasher: Cement producers and traders have expressed mixed views following the government’s increase in the price of mazut fuel, given to factories.
Early Thursday, the Egyptian government raised mazut prices by EGP 1,000 per tonne to reach EGP 3,500 from EGP 2,500.
Ahmed El-Zeiny, head of the building materials division at the Cairo Chamber of Commerce, said he did not believe that the price hike will have a major impact on plants.
Around 98% of factories in the market rely on coal to operate their production lines, as coal is significantly cheaper than mazut and gas, he said.
The market has a cement production surplus of around 4 million tonnes, coinciding with a recent decline in demand, he added.
El-Zeiny further commented that cement prices were heading towards stabilisation in the coming period and may range between EGP 780 and EGP 800 per tonne “not more”, noting that consumer prices currently range between EGP 700 and EGP 750 per tonne.
The market is anticipating an additional 11 million tonnes of production capacity in the current fiscal year, after President AbdelFattah El-Sisi inaugurates six new production lines at a state-owned plant in Beni Soueif.
On the other hand, South Valley Cement Company board member Ahmed El-Miqaty said he expects the price per tonne of cement to rise by around EGP 100 on the back of the decision to increase mazut prices by around 40% one shot.
The decision to raise mazut prices will increase pressures on the sector and will trim companies’ profit margins, he added.
With around 23 cement firms operating in Egypt, total annual production amounts to 60 million tonnes per annum.
Translated by: Nada Adel Sobhi
