cement industry in egypt
Key Figures & Facts of Cement Industry in Egypt
The cement industry is one of the oldest industries in Egypt. The first cement factory dates back to 1911 and was built in Masaara, near Helwan and the first cement company, Torah Portland Cement Co. was established in 1927 (Egypt’s Projects Map).
The cement industry is a main pillar of the highly labor-intensive construction materials industry, which accounts for a large share of the Egyptian economy estimated between 6-8.8% annually (IMF, Mordor Research). Alone, the cement industry contributes nearly 1% of GDP and 10% of the gross national product of the Egyptian industry.
- Number of operating companies: 18 companies
- Distribution of capacity in Egypt:
– State-owned capacity: 18.5 MT with 10 production lines
– Private-owned capacity: 64 MT with 37 production lines
– Multinationals represent 57% of total production capacity
– Total production capacity in 2020: 82.5 million tons (websites of cement companies, UNIDO)
– Cement consumption in the Egyptian market in 2019 was 48.7 million tons, and in 2020 was 44.9 million tons (Ministry of Trade and Industry)
– Idle capacity of more than 30 million tons due to decrease in demand
- Building a production line costs approximately $120 – 180 million.
- Number of production lines in Egypt: 47.
- Investments in the Cement industry in Egypt exceed 255 billion EGP. “Production lines + cost of investment in building, land and infrastructure”.
- Number of direct employees: 50,000. Number of indirect employees: 200,000.
- Raw material: cement factories convert raw material, namely limestone and the quarries to cement blocks (clinker) through thermal reaction. The cost of raw material ranges from 10 to 25% of the total cost of cement production in Egypt.
- Energy-intensive industry: The cement manufacturing process requires constant energy to generate the desired thermal reaction. Cement plants need electric power to operate clinker mills. Egypt’s cement industry relies on coal and petroleum coal as key sources of thermal energy needed to run the factories. The cost of energy is 50-70% of the total cost of cement production in Egypt.
Figure (a): Market Demand
Table (1): Evolution of Cement Production
|1940||400 K/ T|
Table (2): Breakdown of the Cement Industry in Egypt for 2018
|Name of the Company||Plant Location||Number of production lines||Annual capacity in M/T||Fuel Status|
|National Cement Company Beni Suef||Beni Suef||6||12||Coal|
|Suez Cement Group||Suez, Kattamia, Tourah & Helwan||9||12||Coal + Petcoke + AF|
|Lafarge Cement Co.||Ain sokhna||5||9.5||Petcoke + AF|
|EL-Areish Cement||North Sinai||4||6.5||Coal|
|CEMEX Assuit Cement Co.||Assuit||3||5.7||Coal+AF|
|Amreyah Cement Co.||Alexandria||3||5.5||Coal+AF|
|Titan (Beni Suef Cement Co. & Alexandria Portland Cement Co.)||Alexandria & Beni Suef||3||5.3||Coal+AF|
|Arabian Cement Co.||Ain sokhna||2||5||Coal + AF|
|Sinai Cement Co. Vicat||North Sinai||2||3.8||Coal+AF|
|Masr Beni Suef Co.||Beni Suef||2||3.1||Coal + AF|
|Elsewedy Cement Co.||Ain Sokhna||1||2.4||Coal + AF|
|Wadi EL Nile Cement||Beni Suef||1||2.4||Coal + AF|
|Misr Cement Co. Qena (MCQE)||Qena||2||2||Coal+AF|
|Asec Minya Cement Co.||Elminya||1||2||Coal + AF|
|El Nahda Industries Co.||Qena||1||1.5||Coal + AF|
|Building Materials Ind. Co||Assuit||1||1.5||Coal mills in trial operation phase|
|South Valley Cement Co.||Beni Suef||1||1.5||Gaz + Mazot|
|Medecom Aswan||Aswan||1||0.8||Coal + AF|
The table above reflects:
- In 2018, the cement industry in Egypt had 47 production lines operating, which can produce up to 81.2 MT.
- However, the demand in Egypt did not exceed 51 MT resulting in an overcapacity of more than 30MT
Future Projection of the Capacity
In 2019, the capacity is expected to increase due to new entries to reach 83.5MT. Meanwhile, the demand will decrease compared to 2018 resulting in further increase in the overcapacity.
Figure (B): Cost of Production
Table (3): Export of cement
Table (4): Production capacity is higher than demand
|Year||Production capacity (million tons)||Demand (million tons)|
The table above reflects:
- Demand between 2017 and 2020 demand has declined by 17% whereas production capacity has increased by 11%.
- Despite massive construction projects, demand has fallen between 2017 and 2020.
- Production capacity increased by 12 MT (16%) in 2018 due to the new capacity entering the market during the year. It fell in 2019 due to the exit of National Cement Co. from the market.
- With the Egyptian Cement expected to begin production in 2021, the industry’s production capacity will reach 84.5 M/T (Global Cement). Cement demand however is forecasted to not exceed 50 M/T in 2021.
Evolution of Demand for Cement
Small and medium-sized housing projects are the main forces of demand for cement in Egypt. The contribution of these projects ranges from 70 to 90% of the total demand for cement in Egypt compared to the 10-25% for national projects and first-class housing projects.
The Egyptian cement sector suffered from political fluctuations and weak economic growth in 2011, which negatively affected the annual growth of demand which reached an average of 2.7% during the period 2010-2016 compared to the 15% in the period from 2005-2009.
Decline in demand for cement due to flotation: the floating of the pound and the accompanying economic difficulties have had a negative effect on the cement industry, as demand has entered a period of deflation. Demand for cement decreased by about 5% in 2017 and about 4% in 2018. The huge national projects launched during that period did not solve the demand for cement.
Growth needs an economic stimulus: in order for cement demand to return to its usual growth, we need a recovery in the Egyptian economy and an increase in the incomes of individuals, which will allow for continued growth in construction, especially small and medium-sized housing projects.
Evolution of Supply of Cement
- The increase in production capacity led to a gap between supply and demand. Despite the weak demand growth, the production capacities of the industry gradually increased from about 53 million tons per year in 2010 to about 82.5 million tons annually in 2020. This created a gap between supply and demand as the increase in production capacity did not show a similar growth in demand for cement.
- The sharp decline in operating rates: despite the increase in power supply, operating rates have declined sharply, reaching 55 % in 2020 compared to 91% in 2010 (Ministry of Trade and Industry, CI Capital Research).
- Inventory accumulation with weak demand: the gap between supply and demand led to the start of production accumulation. The volume of clinker stocks accumulated in Egypt is about 9 M/T, CI Capital estimates.