Egypt’s cement makers may lose profit on capacity

Egypt’s cement makers may lose profit on capacity
Published: 25 March 2009

Egypt’s cement industry may see profits decline from their current record levels by 2011 when eight new factories start production, according to the country’s main business group, reports Bloomberg.

“There will be an additional capacity in the market of around 12Mt in the next few years,” Walid Gamaleldin, head of the Chamber of Building Material at the Federation of Egyptian Industries, said in an interview by telephone today. “Production will be exceeding market demand. This could be a tough time for the industry.”

The Egyptian government has given eight new licenses to new factories, mostly owned by Egyptians, to produce cement starting in 2011, Gamaleldin said. Each will produce 1.5Mta. Producers such as Titan, Cemex and Lafarge own factories in Egypt.

Gamaleldin said cement producers are making enough profit now to cushion them against the forecast slowdown.

‘This is a very profitable business. People are waiting in line now to buy cement,” he said. “There will be a surplus between 2011 and 2013. Factories will then have to live on the profits they are making now. It’s a pendulum swing.”