The country’s cement industry is seen to be facing a paradox as supply reportedly exceeds demands while per capita consumption is among the lowest globally.
Industrial experts have it that the sector facing production over capacity and is heading to precarious situation when demand does not expand.
Industrial experts have it that the sector facing production over capacity and is heading to precarious situation when demand does not expand.
However, the encouraging news is that the market is there as out of population of 47 million in Tanzania only 4.5 million are cement consumers, according to the Lafarge Tanzania Chief Executive Officer, Ms Catherine Langreney.
She said in Dar es Salaam yesterday that what needed is to create more demand as consumption 'per capita is still low' The CEO said the industry is in more danger today than previous as more players are coming in.
The country’s consumption is merely at 80 kilograms per person which is very low compared to other economies in the world. In Kenya, for instance, is 120kg while in developing world goes up to 500kg per person.
Experts said the low per capita has positive correlation with GDP growth, since the higher GDP pushes up cement consumption as well. The over capacity has positive effect as cement prices in the market have started to go down in recent days from 17,000/- per 50kg bag of mid 2,000's to between 12,000/- and 13,000/-. The negative impact is risks for job loss and factory close down.
The country had three cement firms up to five years ago, with installed capacity of 4.65 million tonnes annually, but to date there are eight producers.
The eighth to come onboard, Nigeria’s Dangote Cement, which went to production, last week push production capacity to over 6.0 million tonnes annually. The good news in cement industry recently are said to have impact on the two listed companies at Dar es Salaam Stock Exchange (DSE).
The two giant manufacturers—Tanzania Portland Cement Company (Twiga Cement) and Tanga Cement Company (Simba Cement)—shares plunged at the time when number of new firms set plants. On the DSE cement manufacturers share prices have depreciated by between 16 and 20 per cent since the beginning of this year.
Twiga cement went down by 16.25 per cent to 3,350/- a share while Simba Cement depreciated by 20 per cent to 3,400/-as of last Friday.
Brokers have it that the cement’s firms share drop is seen as the results of shareholders unwilling to invest more on the sector fearing dividends drop as many players are coming up.
Tanzania Portland Cement Company (Twiga Cement) last year increased capacity by 700,000 metric tonnes- production line.
She said in Dar es Salaam yesterday that what needed is to create more demand as consumption 'per capita is still low' The CEO said the industry is in more danger today than previous as more players are coming in.
The country’s consumption is merely at 80 kilograms per person which is very low compared to other economies in the world. In Kenya, for instance, is 120kg while in developing world goes up to 500kg per person.
Experts said the low per capita has positive correlation with GDP growth, since the higher GDP pushes up cement consumption as well. The over capacity has positive effect as cement prices in the market have started to go down in recent days from 17,000/- per 50kg bag of mid 2,000's to between 12,000/- and 13,000/-. The negative impact is risks for job loss and factory close down.
The country had three cement firms up to five years ago, with installed capacity of 4.65 million tonnes annually, but to date there are eight producers.
The eighth to come onboard, Nigeria’s Dangote Cement, which went to production, last week push production capacity to over 6.0 million tonnes annually. The good news in cement industry recently are said to have impact on the two listed companies at Dar es Salaam Stock Exchange (DSE).
The two giant manufacturers—Tanzania Portland Cement Company (Twiga Cement) and Tanga Cement Company (Simba Cement)—shares plunged at the time when number of new firms set plants. On the DSE cement manufacturers share prices have depreciated by between 16 and 20 per cent since the beginning of this year.
Twiga cement went down by 16.25 per cent to 3,350/- a share while Simba Cement depreciated by 20 per cent to 3,400/-as of last Friday.
Brokers have it that the cement’s firms share drop is seen as the results of shareholders unwilling to invest more on the sector fearing dividends drop as many players are coming up.
Tanzania Portland Cement Company (Twiga Cement) last year increased capacity by 700,000 metric tonnes- production line.
While Lafarge Holcim, Mbeya cement, said yesterday will commission 700,000 metric tonnes vertical mill at the end of this month. Though the industry is blossoming, at the same time, cheap imports from the Middle East countries have continued to enter Tanzanian markets.
These cheap imports, said Ms Langreney, are creating unfair competition as they benefit from widespread acts of tax evasion through under declaration of prices and volumes delivered into local markets.
Recently Manufactures said through Tanzania Chapter of East African Cement Producers Association (EACPA) that they are now facing collapse due to the continued influx of cheap imported products in an already saturated market.
They urged that their situation was being made worse because, they were competing with cheap imports at a time when their margins are squeezed by overcapacity in the market.
The industry last year grew by 7.8 per cent, representing 8.6 per cent of GDP with effect across various construction aspects ranging from individual housing, transportation to mega structures.
These cheap imports, said Ms Langreney, are creating unfair competition as they benefit from widespread acts of tax evasion through under declaration of prices and volumes delivered into local markets.
Recently Manufactures said through Tanzania Chapter of East African Cement Producers Association (EACPA) that they are now facing collapse due to the continued influx of cheap imported products in an already saturated market.
They urged that their situation was being made worse because, they were competing with cheap imports at a time when their margins are squeezed by overcapacity in the market.
The industry last year grew by 7.8 per cent, representing 8.6 per cent of GDP with effect across various construction aspects ranging from individual housing, transportation to mega structures.
Source: Daily News, reported by Abduel Elinaza, from Dar es Salaam, Tanzania
0 comments :
Post a Comment