Cement Industry

cement industry in egypt

Key Figures & Facts of Cement Industry in Egypt

The cement industry in Egypt is one of the oldest industries. The first cement factory in Egypt dates back to the 1920s. The construction materials industry accounts for a large share of the Egyptian economy estimated at 5.9% of the total, with a highly labor-intensive industry. The cement industry is one of the main pillars of the construction industry and building materials, that contributes alone about 1% of GDP (about 10% of the gross national product of the Egyptian industry).

  • Number of operating companies: 19 companies
  • Distribution of capacity in Egypt:

– State-owned capacity: 19.5 MT with 10 production lines

– Private-owned capacity: 61.7 MT with 37 production lines

– Multinationals represent 52% of total production capacity

– Total production capacity in 2018: 81.2 million tons

– Cement consumption in the Egyptian market in 2017 was 53.8 million tons, and in 2018 was 51 million tons.

– Idle capacity of more than 30 MT 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 exceeds 250 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 the 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

Year Production
1940 400.000 tons
1976 3.6 tons
2000 24 million tons
2012 53 million tons of grey cement and 1 million tons of white cement
2013 50.8 million tons
2015 54.1 million tons
2016 64.4 million tons
2017 54.9 million tons
2018 51 million tons

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
Suez Cement Group Suez, Kattamia, Tourah & Helwan 9 12 Coal+HFO+AF
Assuit Cement Co. Assuit 3 6.5 Coal+HFO+AF
Amreyah Cement Co. Alexandria 2 3.7 Coal+HFO+AF
Alex& Beni Suef Co. Alexandria & Beni Suef 3 4.5 Coal+AF
Lafarge Cement Co. Ain sokhna 5 10 Coal+HFO+AF
Sina Cement Co. North Sinai 2 3.2 Coal+AF
Qena Cement Co. Qena 2 2 Coal+AF
Masr Beni Suef Co. Beni Suef 2 3 Coal + AF
Arabian Cement Co. Ain sokhna 2 5 Coal + AF
South Valley Cement Co. Beni Suef 1 1.5 Gaz + Mazot
Medecom Aswan Aswan 1 0.8 Coal + AF
Elsewedy Cement Co. Ain Sokhna 1 2.4 Coal + AF
Wadi EL Nile Cement Beni Suef 1 2.4 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
Asec Minya Cement Co. Elminya 1 2 Coal + AF
National Cement Company Beni Suef Beni Suef 6 12 Coal + AF
EL-Areish Cement North Sinai 4 7.2 Coal + AF
Total 81.2

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

Year Quantities
2016 279 thousand tons
2017 1.02 million tons
2018 386 thousand tons (till June 2018)

Table (4): Production capacity is higher than demand

Year Production capacity (million tons) Demand (million tons)
2017 68.5 53.8
2018 81.2 51

The table above reflects:

  • Demand declined between 2017 and 2018 by -5.2% (2.8 million tons)
  • Despite massive construction projects, demand has fallen between 2017 and 2018
  • Production capacity increased by 12.7 MT (+ 18.5%) in 2018 due to the new capacity entering the market during the year
  • Production capacity in 2019 is 83 million tons with continuous demand decline

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 5.2% 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 81.2 million tons annually in 2018  This created a gap between supply and demand as the increase in production capacity did not show a similar growth in demand for cement.
  • Sharp decline in operating rates: despite the increase in power supply, operating rates have declined sharply, reaching 67% in 2018 compared to 91% in 2010.
  • 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 7.1 million tons, CI Capital estimates.