Domestic cement industry faces tough conditions

30 April 2014

The domestic cement industry is facing tough conditions in the short term, with excess supply expected to keep margins under pressure. As a result, any further investments are likely to be channelled into upgrading dated and inefficient plants.

Supply gains have come from new entrant Sephaku Cement, as well as an increase in imports, which surged 44% last year to 1.1-million tonnes. There is talk in the industry of lobbying for protection from cheap imports.

But the spokesman for the International Trade Administration Commission of South Africa (Itac), Thembinkosi Gamlashe, says the commission has not received an application from the industry.

Gavin Wood, chief investment officer at Kagiso Asset Management, believes the South African cement market “is facing a challenging coming few years”. Amidst the increase in supply, Wood says cement demand “is likely to be weak”.
By Nick Hedley
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