An unprecedented rise in cement prices brings market instability and more real estate recession with it. Mona El-Fiqi reports With cement prices hitting as high as LE300 per tonne over the last few weeks, fears that the real estate market may be headed for further recession have become acute. Experts said the price increases -- from an average of LE180 for the past four years -- were unjustified. Cement prices have always been prone to fluctuations, it nosedived from LE215 per tonne in 2002 to an unprecedented low of LE140 per tonne in 2003. But this year's climb from LE140 to LE300 has stunned consumers, who feel there has been no clear explanation for the rise, especially considering that most of the raw materials used to manufacture cement are available locally. This may soon change as the effect of this week's decisions to abolish tarrifs on cement imports is digested by the market. The decision was taken as a means of catalysing market stability and controlling the price of local cement. Sinai Cement Managing Director Adel Abdel-Kareem blamed the lack of an active consumer protection association for cement traders' brazen gambit to take advantage of increasing demand, by jacking up prices in near defiance of traditional market forces. Abdel-Kareem said some traders were upping their margins to a whopping 23 per cent, buying from the factory at LE230 per tonne, and then selling to the consumer at LE290 to LE300. Summertime always inspires that increased demand, said Ahmed Fateen, general manager of the Federation of Egyptian Industries' construction materials division credits the demand to Egyptian expatriates back in town for summer holidays; many of whom are choosing to construct new houses, and agreeing to buy the necessary cement at any price. According to Khaled Zeidan, project manager at a new Sixth of October housing complex, the real estate sector as a whole was paying the price for this warped dynamic. Zeidan said the weekly fluctuations were even making it exceedingly difficult for a "construction company to set prices for new flats". With the rising cement prices resulting in major increases in the per metre rate of properties at his own project -- from LE1,300 to LE1,600 -- sales have already fallen by 25 per cent compared to last year. On units that were already sold at earlier prices, but were still being built, losses were now being incurred. Zeidan warned that the negative impact on the construction sector would also hit other related sectors, causing widespread unemployment; he urged the government to take a more positive role in controlling prices and protecting consumers. Ten companies produce Egypt's 35 million tonnes of cement annually, of which 25 million tonnes are used by the local market.
