Egypt: cement prices hold firm as energy sources change

Companies have fixed their cement prices and are subject to regular ministry investigations and inspections, said Minister of Supply, Khaled Hanafy, in a Wednesday statement. Cement companies announce their prices by the third week of every month. The investigations are conducted at supply firms, factories, wholesalers and cement retailers to ensure their compliance with the prices they state, said the minister.

Suez Cement (Italcementi Group), which operates Tourah, Helwan and Suez cement plants, fixed its price at EGP850/t (US$119/t). Amreyah Cement Company set a price of EGP831/t, while National Cement had a price of EGP750/t in Cairo and EGP770/t in all other governorates.

Omar Mehanna, chairman of the board of directors of Suez Cement Italcementi Group, told Daily News Egypt that cement prices vary according to market changes and not because the Egyptian ministry obliged the group to do so and he expects future prices to remain stable. He also anticipates an increase in the demand for cement in the coming period and a rise in supply as a result of the use of the new energy system, which will bring more efficient results.

Meanwhile, Medhat Estafanous, head of the Cement Industry Division at the Federation of Egyptian Industries, told Daily News Egypt the cement industry is in the final stages of introducing coal as an alternative source of energy. Omar Mehanna at Suez Cement pointed out that the use of coal has started at the Katameya plant and will start in the Suez factory by the 1Q15.

In July 2014, the government raised the prices of gas and fuel, causing cement companies to raise their prices due to higher production costs. After the increase, cement companies had to buy gas for US$8/mBTUs compared to US$6 previously.

Fuel oil prices increased from EGP1500/t to EGP2250/t. The rise in production costs was the main derivative why cement companies were looking forward to using coal as an alternative source of energy this year.