Palestine: new plant to affect prices?

Palestinian Investment Fund (PIF) subsidiary, Sanad Construction Resources Co, began work on Phase I of its Palestine Cement Factory (PCF) in October 2016.

The first phase of construction at PCF includes the construction of a 1Mta cement mill, including raw material storage, grinding, and packing units at a estimated investment of US$60m, according to the PIF. The plant is being constructed in a remote area southeast of Bethlehem on an area of government-owned land purchased by PIF. Sanad said that the cement plant will invest heavily in environmental safety, with such investment rising from US$3.5m in the first phase to US$25m upon completion of the factory.

Upon completion of the facility in 18 months, overall investment is expected to reach around US$310m , with a capacity to produce 1.3Mta, just over a third of the current domestic demand of 3Mt. Within five years the PCF plant is forecast to meet total current market demand, with the potential to reach a capacity of 5Mta.

As construction companies adopt a wait-and-see approach as to how the new plant will affect pricing levels, Sanad Construction promises its customers it will offer competitive prices once it starts production, according to WAFA.

Speaking to WAFA, a Palestinian news agency, Mr Anabtawi said that while his company currently imports cement from Jordan, Israel, Turkey and Greece, it will decide on whether to rely on PCF as its major national supplier of cement dependent on if it offers competitive rates to local construction companies.

Abdul-Jabbar Shehadeh, CEO of Fara’a Construction Company in Tubas, north of the West Bank, spoke of the new plant project, saying that that based on past experience he does not believe such projects would contribute to lower prices to small enterprises, like his, or to local consumers. Mr Shehadeh cited an example of a Palestinian cement importing corporation, which he said had practiced monopoly in the market, increasing price of cement from US$103/t to US$130/t.