Lebanese cement exports hit by Syria unrest

Lebanese cement exports hit by Syria unrest
Published: 11 October 2011

Lebanese cement exports to Syria and Iraq have fallen drastically as companies find it increasingly difficult to ship their products overland through Syria, which is facing security disturbances.

“The situation is now critical because the sales are decreasing radically to Egypt and Syria,” Pierre Doumet, general manager of Cimenterie Nationale told The Daily Star.

The company used to export 97 per cent of its cement to Syria, Egypt and Iraq. In 2007, it invested US$100m in a production facility in Chekka in anticipation of increased regional demand.

“Now, we’ll have to export much further away. Cement travels with difficulty. It’s not a value-added product. We have to travel further and sell it cheaper. We’re now exporting more to Cyprus and we’re looking at the markets in Spain and Italy – which are all under severe recession.”

Today, as Lebanon’s neighbors continue to experience turmoil, producers of cement, one of Lebanon’s largest export items, are now looking at ways to make up for lost business. And as exports through Syria dwindle, they see that regional competitors, such as Jordan and Turkey, are gaining ground as they are able to offer lower prices because of their geographic proximity and cheaper gas prices.

Lebanon produces 6.5Mta of cement, with an average price of US$92/t and with a domestic demand of 5Mta, meaning 1.5Mt need to be exported.  
But cement delivery in Lebanon mainly depends on the real estate boom in the country, which sometimes grinds to a halt in the event of security incidents.

“Unrest in Egypt and Syria both started around the same time. Syria was not only an export market but also a transport route to Iraq. Now it’s more complicated, especially with Syria’s export ban,” said Doumet, noting that even though his company continues to ship cement through Syria (while construction demand has almost completely stopped), higher risk has meant higher insurance and transport costs.

Compounding the problem of sharply declining exports is a stagnant and uncertain domestic market that doesn’t have the capacity to absorb all of the output. As Lebanon’s construction slows down, cement producers worry about what will come next.

“We need to look at the outlook and the indicators: Stagnation of construction activity, uncertainties, and a lack of government spending on infrastructure. These factors might lead to a decrease in domestic consumption,” said Jamil Bou Haroun, business development manager at Holcim, Lebanon’s largest cement producer. He said that although the domestic market is currently stagnant, he’s reluctant to increase exports due to regional unrest.

Source: The Daily Star