New cement factories expected to shrink gap
Local cement producing factories that are under final stage for commissioning are expected to shrink the gap between demand and supply in the coming six months.
The country’s booming construction industry increased cement demand by 12 percent per annum starting from 2004, but the figure is currently way above 12 percent. “The current cement demand rate is higher than the previous growth rate,” one expert involved in the sector said.
Currently, local factories including small scale factories produce about 2.7 million ton of cement annually, while the estimated demand is over 8 million ton per annum.
The construction boom in the last three years, that triggered high cement demand, forced the government and some private companies to import the product. Though the imported cement was delivered to the market along with the local product, the market still did not settle down.
The gap between the high demand and short supply led the price of cement to scale up to 400 birr per quintal from the 250 birr price per quintal on the Addis Ababa market.
“The significant increase in cement production in the coming year will settle the market instability and fill the gap,” the expert added.
The new cement factories and others expansion that are expected to commence production in the coming few months will increase the supply of the product hence decreasing the wide gap that exists between demand and supply. This will actually force the price to decrease considerably.
The state-owned Mugher, the largest cement factory in the country, is currently expanding in order to increase its annual production to 2.4 million tones from the current 900,000 tones starting from the beginning of December 2010.
Private cement factories that are under construction or those that have finalized their projects are expected to minimize the cement demand gap by half along with Mugher’s new expansion, which is being constructed around Tatek Military Camp, 12km west of Addis Ababa.One of the major private cement factories, the Chinese Hung Shen, is expected to commence production in November. The plant is located around Gebre Guracha, 165km northwest of Addis Ababa and has the capacity to produce four million tons of cement annually.
Experts say that cement demand is continuing to grow in relation with the rise of the construction sector. “The rapid rise of cement demand is expected to continue in the years to come, because currently most construction projects are halted due to cement shortage,” the experts explained. “When these projects revive, the demand will also grow.”
Currently about 25 local and foreign companies are registered in the country to engage in cement production, but most of them are not feasible, according to the information obtained from the Ministry of Mine and Energy http://capitalethiopia.com/index.php...-news&Itemid=4