Competition between cement producers has brought down prices as domestic demand remains fairly low when compared with increasing supply, according to First Capital.
In March 2019 domestic production capacity has more than doubled to 2.2Mta, when compared with 1Mta in March 2018 as Whale Rock entered the market. However, local demand remains at 0.6Mta. This has led to a fall in prices with First Capital highlighting a drop of 10.4 and 10.1 per cent for semi- and high-strength cement, respectively.
“Despite the fact that the domestic production capacity increased to 2.2Mta, local demand remains fairly low at 600,000t of cement per annum. With the market that has doubled its production capacity amid the prolonged weak demand, we hold a view that prices will weaken further throughout 2019,” First Capital said.
