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Industry Minister Kamel El Wazir ordered a comprehensive study into the cost and pricing structure of the cement industry, according to a statement out yesterday following a meeting between El Wazir and top cement producers. The Industrial Development Authority and the Consumer Protection Agency will take care of the study, which will dive into production costs, income margins, and pricing mechanisms, in a bid to determine a fair retail price and curb price manipulation.
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Prices have fallen, but not enough: While cement prices have fallen over the past few weeks, more needs to be done to ease the pressure on consumers, El Wazir said during the meeting. He acknowledged a recent downward trend but said factories need to keep ramping up output and improving efficiency to sustain the decline and bring prices closer to production-linked levels.
REMEMBER- Local cement prices fell some 25% to around EGP 4k per ton last month after producers agreed with the government to raise output in response to local and export demand. Analysts at the time estimated cement prices to fall further to EGP 3.3-3.5k per ton if idle capacity comes back online, but so far prices have remained stable at the EGP 4k per ton mark.
More production capacity is needed: El Wazir called on factories to resume idle production lines and apply for the needed licenses to increase their production capacity. He said that at least eight idle lines are currently being rehabilitated, in a move that will help drive prices down.
ICYMI- The government in July gave cement factories one month to restart idle production lines as part of a broader push to stabilize prices and meet local demand.
In a bid to ensure price stability: El Wazir called for the need for cement players to write the final price of their products on all cement bags before they are shipped to market. The price tag will need to reflect the estimated market price one month in advance.
More alt fuel use in cement production? El Wazir also added that there are talks with the cabinet over allowing all cement factories to use locally sourced alternative fuels — including agricultural and municipal waste — in a bid to reduce reliance on imported coal. This comes as part of a broader policy push to reduce coal consumption in heavy industries and expand the use of refuse-derived fuels and other low-emission fuels.
