CAIRO: Alexandria Cement announced this week that it would begin importing cement from its operations in Greece, perpetuating a trend that has gained momentum in recent months.
With demand up and cement prices rising, companies have begun looking outside the borders to fulfill local demand.
Alexandria Cement informed the Ministry of Trade and Industry that its first shipment of cement imported from its factory in Greek has arrived, adding that it will import 12,300 tons every 12 days, according to local press reports.
Prices rose until April 2009 and they have stabilized since. Prices in January rose by 23 percent, as compared to January 2008 levels. They were up 18.8 percent in February, year-on-year, and 27 percent in April.
Analysts have attributed several reasons to the increased demand for cement.
“The real estate industry is the main driver for cement, said Ismail Sadek, an analyst at Cairo-based investment bank Beltone Financial.
The real estate market, he noted, has continued to boom despite the nearly year-old economic recession.
“The backlog has not been slowing down, Sadek said, referring to the fact that many real estate consumers had fronted capital from projects that, therefore, continued on schedule despite the economic slowdown. Much of this has to do with the plethora of housing compounds that have sprung up to the east and west of Cairo.
Infrastructure projects actually account for a much greater portion of cement sales than do housing developments. An increase in infrastructure project, brought about at least partially due to the Egyptian government’s economic stimulus plan, has also led to an increase in demand for cement.
A final reason for the increased demand for cement was the decline in steel, which encouraged growth in the real estate sector.
But the effort to stabilize the price of cement has led to a decision by the Egyptian government to allow imports.
The Ministry of Trade and Industry passed a series of measures in April of this year to get a handle on spiraling prices.
First, the ministry reintroduced an export ban that is expected to run for three months, until mid-July. That export demand is expected to significantly boost local supply.
Second, all cement producers have been mandated to print the factory prices of the cement on each bag. This demand for increased transparency is supposed to insure that the companies cannot engage in price gouging.
Third, the government has allowed companies to boost local supply by importing cement from abroad. Furthermore, the ministry has reduced the holding period for imported cement from 30 days down to three days.
Still, cement imports are not expected to compete favorably with locally manufactured cement, meaning they shouldn’t have a major effect on the market.
“Egyptian cement producers are much better positioned to compete in the Egyptian market than international companies because of lower production costs, Sadek said.
Low oil prices in Egypt are a critical cause of the lower production prices. Oil in Egypt is heavily subsidized and is, therefore, cheaper than it is in other countries from which Egypt might import steel.
Beginning in April of this year, Egypt imported cement from Turkey. This latest move by Alexandria Cement is expanding the market for Egyptian cement imports.