Egypt’s government has moved to stabilize the cement market after months of sharp price increases. Deputy Prime Minister for Industrial Development and Minister of Industry and Transport Kamel El-Wazir announced steps to boost production, limit exports, and introduce transparent pricing.
Officials say the market is now better supplied, but industry leaders disagree on the causes of the crisis. Some argue it was the result of temporary demand shifts, while others point to deliberate production cuts, reflecting the ongoing tension between protecting consumers and maximizing company profits.
In an attempt to regulate one of the country’s most sensitive markets, one that affects both state projects and citizens, Minister El-Wazir held an extensive meeting with major cement manufacturers.
The meeting, held at the end of August, was attended by officials from the investment sector, chambers of commerce, the Competition and Consumer Protection Authorities, and the Industrial Development Authority (IDA).
It carried a clear message from the state: it is time to restore balance to the market and address challenges that have led to price spikes in recent months.
During the meeting, the minister acknowledged that cement prices had recently dropped significantly but stressed that the decrease was still insufficient to achieve the required market balance.
He also called for further price reductions while ensuring continuous production and profitability for factories.
He urged factories wanting to expand output to submit formal requests to the IDA to amend their licenses for maximum efficiency.
He also announced plans to restart eight idle production lines, including some shut down for technical or environmental reasons, such as the need for a bypass landfill at a Beni Suef factory.
Disputed causes of the crisis
Ahmed El-Zeiny, head of the General Division for Building Materials at the Federation of Egyptian Chambers of Commerce, argued that the current situation is not a natural supply-demand issue but rather a direct outcome of what he called “monopolistic practices” that began nearly four years ago.
He told Ahram Online that several major foreign companies had applied to the Competition Authority for official approval to cut production under the pretext of balancing costs by reducing supply. This approval was initially granted for one year and later extended.
According to El-Zeiny, this move triggered an unprecedented surge in cement prices, with the price per ton jumping from around EGP 800 to over EGP 5,000 at the height of the crisis in April and May.
He argued that the deliberate market shortage was not caused by changes in costs or energy but by a clear plan to maximize profits, noting that nine production lines were shut down, including three in a single factory.
He also pointed out that foreign companies had not upgraded any of their lines despite receiving significant government incentives.
Local cement production has been steadily increasing, reaching a total of approximately 25.39 million tons between January and July 2024, compared to 23.3 million tons during the same period last year, according to the latest data published by the division.
This reflects growing demand both domestically and internationally. Data released by the Central Bank of Egypt (CBE) confirms this upward trend in the market, showing a continuous increase in production and sales and further strengthening Egypt’s position as a leading cement producer and exporter.
'No real crisis' view
Meanwhile, Ahmed Sherine Kereem, head of the Cement Division at the Federation of Egyptian Industries, offered a different perspective, saying there was no real cement crisis, only a temporary disruption caused by a sudden surge in demand from both local and export markets.
This coincided with a traditional slowdown in operations during Ramadan, when factories conduct regular maintenance.
Kereem explained to Ahram Online that the Ministry of Industry acted swiftly once signs of the crisis emerged, forming task forces to meet demand. These efforts successfully contained the situation by early June, leading to a nearly 20 percent price drop.
He added that the market is now oversupplied, with available stock far exceeding demand, which is gradually stabilizing prices.
He stressed that most cement factories rely 95 percent on coal as an energy source, with minimal dependence on natural gas, dismissing claims that rising gas prices were behind the crisis.
Kereem also noted that the ministry instructed companies to limit exports to 30 percent of total production to ensure local market stability, a directive most companies complied with.
Government tools to control prices
In a shift from traditional oversight to direct intervention, Minister El-Wazir tasked the Consumer Protection Authority and IDA with preparing a detailed report on the cost of producing a ton of cement, including a fair profit margin and taxes, to set a reasonable consumer price.
He also announced that the ministry plans to seek cabinet approval to allow the use of alternative fuels derived from agricultural and household waste in cement plants, thereby reducing reliance on imported coal and lowering import costs.
Another measure requires companies to print the anticipated retail price on cement bags at least one month before they reach the market, aiming to increase transparency and protect consumers from sudden price fluctuations.
Additionally, the government will repurpose waste generated from production lines for infrastructure projects in coordination with the Roads and Bridges Authority.
Encouraging expansion
Kereem noted that the government currently supports the industry and is considering issuing new licenses for cement factories in response to growing investor interest in the sector.
He said demand for cement is expected to rise both domestically and internationally due to reconstruction and infrastructure projects in Egypt and neighbouring countries, prompting the government to encourage production expansion rather than limiting supply.
Kereem also emphasized that the sector has recently become more stable and able to withstand crises, thanks to structural improvements.
State-owned producers
El-Zeiny credited the improvement in market conditions to state intervention, citing the Beni Suef plant owned by the National Service Projects Organization, which produces around 39,000 tons daily and sells at prices about EGP 800 lower than foreign companies.
He also praised the role of the state-owned Arish Cement Company, which injected large quantities of cement into the local market, helping reduce prices from EGP 5,000 to EGP 4,000 per ton. He said the government stepped in when prices became “unreasonably high.”
However, El-Zeiny warned that some companies’ intentions remain unclear, accusing them of seeking excessive profits without real commitments to market stability. He urged regulatory authorities to tighten field inspections and enforce compliance with production expansion and supply commitments.
Gas prices not a factor
Contrary to claims that the crisis was driven by rising gas prices, all stakeholders confirmed that gas has little impact on cement production costs.
El-Zeiny stressed that 90 percent of factories use coal, which is cheaper and more common.
However, Kereem noted that gas use is minimal and limited to older production lines, making energy price changes an unlikely explanation for price surges.
This shifts the focus to governance and market regulation, particularly given contradictions in company behaviour.
While the state claims it has streamlined import, operation, and licensing procedures, some factories continue to delay upgrades or supply releases to manipulate prices.
Market improving, oversight still key
Egypt’s cement market is now at a crossroads between stability and volatility. While product availability has improved and prices are dropping, monopolistic practices persist, and concerns over artificial shortages remain unless strict oversight is enforced.
The government has shown flexibility by engaging in dialogue but is also introducing real regulatory tools, including pricing oversight, restarting production lines, and promoting alternative fuels.
Meanwhile, business leaders remain divided. El-Zeiny calls for strict monitoring of foreign companies, while Kereem supports investment, expansion, and exports.
The government stands between safeguarding consumers and ensuring fair competition, seeking a balanced path forward for the sector.
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