Jordanian producers strive to increase competitiveness

Overcapacity in the Jordanian cement market is forcing local firms to increase competitiveness amid a challenging operating environment, according to the general manager of Jordan's most recent market entrant.

Speaking to the Jordan Times, Basem Zabian of Northern Cement Co, said that cement capacity currently stands at about 10.5Mta while cement consumption is 3.7Mt. and is expected to rise to 4Mta this year.

This 6-7Mta of demand-supply imbalance is leading to cost cutting measures as new players enter the market.

“Five companies are competing for a slice bigger than the 20 per cent share split among them in the local market,” Zabian told local press. Northern Cement is the latest entrant into the Jordanian market, with a 1Mta grinding plant in Amman.

The scale of building activity in Jordan is nowhere near the construction frenzy seen in countries like Oman and Saudi Arabia. The government forecasts domestic demand to rise to 4.3Mta  by 2015 – 6Mt below the country’s total cement capacity.

With limited export opportunities, cost cutting has become important said Zabian, adding that managing to break even will be an achievement in itself for Jordanian cement firms. Cement is being sold at JD68-70/t, while the normal price should be between JD90 and JD92/t.

While exports to Syria have been ruled out for the time being due to the conflict there, Mr Zabian said Jordanians could acquire a portion of the business in the future by supplying cement to the southern region of Syria. The general manager pointed to the West Bank as the only place where Jordanians are having a good opportunity. Northern Cement Company enjoys a 40 per cent share of the bulk cement in Palestinian market, he said.