There is a paradox in the development of cement industry in Tanzania. On the one hand, the supply of cement exceeds the demand, and on the other hand, the per capita consumption of cement is at the lowest level in the world.
Industry experts said that the cement industry is facing overcapacity, if demand does not increase, the industry will enter a precarious situation. However, Catherine Langreney, chief executive of Lafarge Tanzania, said it was encouraging news for the cement industry that only 4.5 million of Tanzania's 47 million people were cement consumers. She said in Dar es Salaam recently that since per capita consumption is still very low, what needs to be done now is to create more demand. The CEO also said that the industry is becoming more dangerous as more companies enter the cement industry. At present, the per capita consumption of cement in China is only 80 kilograms, which is quite low compared with other economies in the world. For example, per capita cement consumption in Kenya is 120 kg, while in developing countries it is around 500 kg.
Industry experts said that the low per capita level is positively correlated with GDP growth, and higher GDP will promote the increase of cement consumption. Overcapacity has caused the price of cement to fall from TShs per 50 kg 17000 in 20000 to TShs 12000 ~ 13000 (US $6-6.5) at present, which has had a negative impact on unemployment and plant closures.
Five years ago, there were only three cement plants in China, with an annual cement production capacity of 4.65 million tons, but now there are eight producers.
The eighth cement producer, Dangote Cement in Nigeria, has brought Tanzania's cement production capacity to more than 6 million tons. Two manufacturing giants, Tanzania Portland Cement Company and Tanga Cement Company, have been hit by Dangote. Cement's entry shares are down 16% and 20% this year.
Tanzania Portland Cement Company (Twiga Cement) added a 700,000-ton-a-year cement production line last year. LafargeHolcim's Mbeya cement said it would start production of the 700,000-tonne vertical mill by the end of the year. Although the cement industry is still expanding, cheap imports from Middle Eastern countries continue to enter the Tanzanian market.
Catherine Langreney said that cheap imports make the market unfair because most of them evade taxes by understating prices and sales volumes.
Firms of the East African Cement Producers Association (EACPA) recently said they were facing collapse due to the continued influx of cheap goods into an already saturated market. They point out that competition with cheap cement and a surplus market squeezing margins are making their situation worse.
In 2014, the cement industry grew by 7.8%, accounting for 8.6% of GDP, and the industry has an important impact on all kinds of buildings, from housing, transportation to large-scale infrastructure.
浙公网安备33010802003254号