Supply surplus could force six cement producers to exit the Egyptian market if the crisis is not resolved, Lafarge Egypt’s CEO Solomon Baumgartner Aviles said during a webinar.
Companies across the sector have been mired in crisis over the past several years amid increasing production costs and a prolonged oversupply crisis that has forced them to slash prices in a bid to stay afloat.
With little being done to alleviate the situation, firms are now “on the edge of a precipice” and face collapse, Aviles said yesterday.
The covid-19 pandemic and the government’s decision to halt construction permits for six months has added to the downward pressure on demand, causing production to fall to record lows in May, he said, adding that demand is expected to fall 15 percent to 42 mn tonnes in 2020.
“Urgent decisions are required from the government, because unfortunately, if action is not done quickly, a number of companies may not be able to continue and bear more losses and are forced to close,” Aviles said.
He also suggested a proposal to set production quotas for companies linked to carbon emissions, to achieve the joint goals of reducing production and preserving the environment.
The glut has already hit several companies: National Cement, Tourah Cement, and El Nahda Cement have all either permanently or temporarily suspended production over the past two years, as new government-owned factories exacerbated the already serious supply crisis.