BAMBURI PREDICTS FURTHER DROP IN CEMENT DEMAND

Bamburi
Cement expects demand for cement to remain muted for the remainder of 2019 due
to slow down in government projects and credit squeeze.

Managing
Director Seddiq Hassani said there has not been much recovery in demand so far
as had been expected, meaning annual consumption could fall for the third
straight year from the peak of 6.3 million metric tonnes of 2016.

“We were
expecting to recover but the market has been flat. In 2019, we see a flat or
slight decline of 2% meaning the market will be below 5.8 million metric
tonnes,” he told the Business Daily.

Hassani
linked the decline in consumption on reduced infrastructure activity due to
rising debt as well as a drop in real estate projects as borrowers struggle to
access loans.

“We have
seen some government projects get cancelled, postponed or scaled down. This has
also had a psychological impact on individual home projects compounded with
limited credit,” explained Mr Hassani.

This has been worsened
by declining cement prices as the industry tries to woo new customers in an
environment of rising electricity and fuel costs.

Cement production
decreased by 2.4% while consumption grew marginally by 0.18% in the half-year
of 2019, according to the Kenya National Bureau of Statistics.

Kenya’s cement
manufacturers Bamburi, recently acquired ARM Cement, Mombasa Cement, East
African Portland Cement, Savannah Cement and National Cement — have been
increasing their capacity despite falling consumption.

Total capacity stands at 13.2 million metric tonnes but production in 2018 was 6.07 million metric tonnes, being utilisation rate of 46%. This contrasts with a utilisation rate of 69 % in 2016.https://www.businessdailyafrica.com/corporate/companies/Bamburi-predicts-further-drop-in-cement-demand/4003102-5319472-kaa18d/index.html