Cement Sales Plunge 14% YoY in Q3 on Back of Building Permit Suspension: Pharos

15/11/2020

Cement sales in Egypt, including domestic and export sales, totaled 10.5 million tons in the third quarter of this year, a 14.2 percent year-on-year decrease, despite a 3.6 percent increase from the second quarter of 2020, Pharos Research said in a research note, adding that the decrease was tied to a halting of building permits.

"The government's focus on fighting illegal building activity … definitely weighed down on building materials demand and cement specifically," read the report.

Pharos expected fourth quarter sale volumes to remain below the equivalent period last year, despite an expected "little to muted quarterly growth."

The average retail price for cement in the third quarter hit EGP 729 ($46.62) per ton, which is 4.6 percent down compared with the second quarter and 12.2 percent down year on year, Pharos added.

However, Pharos predicted prices would rebound to pre-pandemic levels of EGP 800 ($51.16) per ton after the government gives the green light to the new building regulations.

In May, the government suspended building permits nationwide for six months. By the end of this period, new legislation governing building requirements should be put into effect.

Egypt's cement industry has been struggling since 2016, after the Egyptian pound lost half its value against the dollar after being floated.

The coronavirus pandemic has also taken a toll, decreasing demand in an already overcrowded domestic market.