Egypt, S.Arabia step up trade ties through coordination council talks    Egypt reviews progress on $200m World Bank-funded waste management hub    Egypt urges Israel to accept Gaza deal amid intensifying fighting    SCZONE showcases investment opportunities to eight Japanese companies    Egypt, ADIB explore strategic partnership in digital healthcare, investment    SCZONE, Tokyo Metropolitan Government sign MoU on green hydrogen cooperation    Egypt welcomes international efforts for peace in Ukraine    Al-Sisi, Macron reaffirm strategic partnership, coordinate on Gaza crisis    Contact Reports Strong 1H-2025 on Financing, Insurance Gains    Egypt, India's BDR Group in talks to establish biologics, cancer drug facility    AUC graduates first cohort of film industry business certificate    Egyptian pound down vs. US dollar at Monday's close – CBE    Egypt's FM, Palestinian PM visit Rafah crossing to review Gaza aid    Egypt prepares unified stance ahead of COP30 in Brazil    Egypt recovers collection of ancient artefacts from Netherlands    Egypt harvests 315,000 cubic metres of rainwater in Sinai as part of flash flood protection measures    Egypt, Namibia explore closer pharmaceutical cooperation    Fitch Ratings: ASEAN Islamic finance set to surpass $1t by 2026-end    Renowned Egyptian novelist Sonallah Ibrahim dies at 88    Egyptian, Ugandan Presidents open business forum to boost trade    Al-Sisi says any party thinking Egypt will neglect water rights is 'completely mistaken'    Egypt's Sisi warns against unilateral Nile measures, reaffirms Egypt's water security stance    Egypt's Sisi, Uganda's Museveni discuss boosting ties    Egypt, Huawei explore healthcare digital transformation cooperation    Egypt's Sisi, Sudan's Idris discuss strategic ties, stability    Egypt to inaugurate Grand Egyptian Museum on 1 November    Greco-Roman rock-cut tombs unearthed in Egypt's Aswan    Egypt reveals heritage e-training portal    Sisi launches new support initiative for families of war, terrorism victims    Egypt expands e-ticketing to 110 heritage sites, adds self-service kiosks at Saqqara    Palm Hills Squash Open debuts with 48 international stars, $250,000 prize pool    On Sport to broadcast Pan Arab Golf Championship for Juniors and Ladies in Egypt    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Germany among EU's priciest labour markets – official data    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Ministry of Trade struggles to enforce cement price cap
Published in Daily News Egypt on 20 - 09 - 2006

Rachid promises tough measures ; some producers lower factory price to LE 300
CAIRO: Almost one month after the government capped the ex-factory and retail prices of cement at LE 290 and LE 330 per ton, respectively, none of the local producers have complied. Non-compliant producers include the 95 percent government-owned National Cement Company (NCC).
Still, the Minister of Foreign Trade and Industry (MFTI) announced Sunday Suez Cement and its subsidiary, Arab Swiss Engineering Company (ASEC), have complied by agreeing to lower their ex-factory prices to LE 300 per ton from LE 332. Both companies, along with Portland Torah Cement ran several advertisements in Tuesday s government newspapers announcing the reduction.
The government intervened in late August after local factory prices reached as high as LE 390 in Q1 of this year before stabilizing around LE 350 to LE 360 in Q3.
HC Brokerage Senior Analyst NamatAllah Choucri says the government is unlikely to push for a further reduction to the original LE 290 limit as it lacks the legal means to do so. There s no law that penalizes companies for raising prices as a result of fair competition and rising demand, therefore, the reduction to LE 300 is considered a relative achievement, she says.
In a joint-seminar with the Competition Commission on Sunday, Minister Rachid Mohamed Rachid said the battle with cement companies is not over, adding MFTI will not concede its original price-reduction demands.
Compared to markets that match closely to Egypt, local prices remain low, says Choucri. Turkey, for example, averages $71 (LE 408) per ton. For us, I think year-on-year price increases are only natural and are a result of the free market.
But while the government may not have the legal tools to cap prices, some analysts say cement companies are forced to comply because of their dependence on cheap raw materials and low energy costs from the government. The government could also export tariffs, as threatened by Rachid this week to further pressure producers.
The government has made favourable conditions for local cement producers which have helped keep high profit margins for companies and local prices below international levels, says one analyst. Government control gives it bargaining weight to cap prices, even if only temporarily, the analyst adds.
Cement producers have reported, on average, gross profit margins exceeding LE 150 per ton, or more than 50 percent. Most analysts credit high margins to low energy and labour costs. Small and large caps alike have reported Q1 and H1 results showing triple digit revenue increases in many cases. Suez Cement reported LE 484 million in H1 net income, up 214 percent from LE 154 reported in H1, 2005. And according to HC Brokerage, small caps such as Misr Beni Suef Cement, Misr Cement Qena and Sinai Cement have averaged more than 95 percent in net earnings increases in H1, 2006. Ex-factory prices averaged LE 242 in 2004 and LE 274 in 2005, according to HC.
What s happening now is you have multinationals that are control of the market, HC Cement Sector Analyst Ahmed Badr told The Daily Star Egypt. Before, the government used to be in control so it could set the price. Now multinationals are running the market so why can t they raise prices?
Rachid has announced MFTI is prepared to implement tough measures to force companies to observe the price caps, although he declined to specify during Sunday s seminar.
In early August Suez Cement acquired a 69 percent share in ASEC, making the former the largest cement producer in the country with 12.4 million tons in annual production, representing 30 percent market share. The Egyptian Cement Company is the second largest producer with 7 million tons. NCC is the largest public sector producer with 3.2 million tons annually.


Clic here to read the story from its source.