CAIRO: The decision this March by the government to ban cement exports again saw positive results this week locally with the retail price of cement dropping by LE 10 to around LE 485 per ton. This price decline comes during the demand-heavy summer months, and as 20 industry executives await their verdict today in a price-fixing scheme. Cement prices peaked at about LE 520 to LE 550 per ton before backing off to their current levels. The Egyptian government first levied a hefty LE 65 tariff on the export of cement in February 2007. It increased the tariff to LE 85 in August of last year before banning exports altogether this March. Though both the production side and the retail side have shared the burden of the export ban, explained Ahmed Shams El Din, vice president of equity research at EFG Hermes, the ban has likely had a more negative impact on the retailers. He noted that producers with high exposure to the export market, like Misr Beni Suef and Qena, have been especially negatively affected. "Most of the price manipulation was done on the retail side, he added.The domestic price of cement has risen dramatically from about LE 300 at the beginning of 2007. Some cement companies have seen an explosive rise in profits over the past several months. Suez Cement, Egypt's largest cement company, reported this week a 28.8 percent increase in profits for the first half of 2008. Its profits were LE 768.99 million for the first half of 2008 as compared to LE 597.04 million a year ago. Another industry leader, Helwan Cement, made a net profit of LE 318.6 million for the first half of 2008, a 65 percent increase over its first half 2007 net profits. These massive profit gains in spite of the export ban illustrate the intense increase in building projects and resulting increase in demand for cement. Not all cement companies saw a surge in profits, though. Tora Cement announced that its first half profits fell 19 percent as compared to its first half 2007 profits. Its first half haul was LE 164.3 million. It is expected, though far from assured, that the government will follow through on its decision to lift the export ban in October. "I don't think [the export ban] will be re-imposed at anytime, added Shams El Din. Skyrocketing energy prices over the past year have brought record investment from the Gulf States to Egypt, demanding massive quantities of cement to build infrastructure in the country. In other news that has captured the attention of the cement industry, 20 cement company executives indicted on charges of monopolistic price gouging practices will be read their verdicts Monday in a trial that has lasted seven months. The implicated companies include Suez Cement, Misr Beni Suef, Misr Qena and Tora Cement. The accusations have specifically charged the companies with colluding to set industry prices.
