Cement factories plan to raise the price of one tonne of cement to EGP 750 for merchants and EGP 800 for consumers, according to an official from the Building Materials Division at the Federation of Chambers of Commerce.
According to the official, who preferred to remain anonymous, cement companies are currently leading a coalition to increase prices in light of the energy shortage that has marked the month of August as well as a lull in demand in order to make up for the revenue shortfall.
The price of one tonne of cement for merchants is currently EGP 700 and EGP 770-780 for consumers.
“Egypt produces approximately 65m tonnes per year of cement and consumes 55m tonnes,” said Secretary-General of the Division Abdelaziz Qassem. He added that the increase in energy prices and the shift to coal as temporary solutions for the issue will result in higher cement costs.
The cabinet agreed to allow cement factories to use coal to generate energy in accordance with environmental standards defined by the Ministry of Environment, although these standards have not yet been issued according to the Building Materials Division official.
Qassem believes that a hike in the price of one tonne of steel will affect building material prices, as one tonne of steel currently costs EGP 5280.
The price of one tonne of steel has risen between EGP 140-200, according to Mohamed Hanafi, General Director of the Chamber of Metallurgical Industries at Egypt’s Federation of Industries.
Hanafi said that the coming months will witness a rise in real estate prices due to the high price of building materials as well as increasing inflation indicators.
He added that land value accounts for 50% of the price of real estate while the value of construction materials and inflation account for the remaining 50%. Inflation comprises approximately 15% of the total.
Hanafi mentioned that the production capacity of Egypt’s steel factories is approximately 10m tonnes, although production failed to exceed 8m tonnes last year.
Steel production decreased to 3.2m tonnes from 3.8m tonnes last year, according to a statement from the Chamber of Metallurgical Industries.
“We do not know if the price of one tonne of steel will increase in the near future in the absence of a clear vision,” Hanafi said.
Billet prices increased to $540 per tonne compared to $530 at the end of July according to Rafik Al-Daw, member of the Suez Steel Board of Directors.
Hanafi said that steel price increases are due to a reduction in the quantities of energy supplied to factories. The continuing energy crisis has resulted in repeated electricity cuts and a large proportion of gas has been directed to power stations in order to address the issue by generating more electricity.