South Africa: economy pushes cement sales down

South Africa: economy pushes cement sales down
Published: 12 August 2008

The slowdown in economic growth is seen as the main cause for the decline in the sales of cement. According to the Cement and Concrete Institute, the sales of cement fell by 0.9 per cent in July compared to a year earlier.

Pieter Strauss, managing director of NPC/Cimpor, said: “The cement industry has been affected by a lot of issues including the general economic situation, electricity supply and industrial actions.”

This decline in sales includes Botswana, Lesotho, Namibia and Swaziland.
“When we look at the period from 2005 to 2007, there was good growth but this decline happened only recently. To match this decline in sales and the effects of the inflation rate, we increased our prices by between 8 and 10 per cent in July,” said Strauss.

According to Dawie Roodt, an economist at the Efficient Group, the drop in sales might just be a return to normality “considering that we had a huge increase in sales in recent years”.

July sales dropped to 1399Mt from 1411Mt a year earlier.

Orrie Fenn, chief operations officer of PPC Cement, said: “This slight decline might have been brought by the terrible rains experienced in the Western Cape during July.
“I think the cement industry could avoid such declines by robustly addressing skills shortages.”

Cement companies believe that this decline won’t be a big blow because of big construction projects such as the Gautrain.

“The decline in the residential market is one of the causes of this decline. And this is caused by the high interest rates,” Karl Meissner- Roloff, CEO of AfriSam said.

“Other challenges in our sector are high coal prices, high fuel prices, from a delivery point of view, and the proposed electricity hike which is way above inflation,” he added.