Despite the current oversupply scenario befalling the Algerian cement industry, the sector is expected to see a further increase of capacity at a CAGR of 1.8 percent by 2025, exceeding 46 million tons, reveals CW Research’s 2020 update of the Algeria Cement Market Report.
Cement demand in the country is estimated in 2020 at less than half the capacity, an unhelpful combination arising not only out of the slowdown in construction activities as consequence of the lockdown measures adopted to contain the pandemic but also because of the reduction in government investment due to the decline in global crude oil prices.
However, several infrastructure projects are scheduled to be implemented by the Algerian government over the next five years with total investment exceeding USD 13 billion, revealing prospects for sustained growth in demand, especially boosted by oil and gas sector investments.
The government is focused on taking advantage of not only the existing over capacity as well as the export infrastructure in place in many of the cement plants. Cement exports, including clinker, are expected to reach more than 6 million tons in 2025, as the government and cement producers make efforts to boost the trade and increase exports to Europe, the United States as well as existing trading partners in across Africa.
"The ability of the Algerian government to finance these ambitious but necessary infrastructure projects is contingent upon a global economic recovery driving up the demand as well as the price for crude oil. The cost competitiveness of Algerian cement production will determine its ability to compete in a price sensitive trading market", observes Prashant Singh, CW Group’s Associate Director.
An industry that grows in an economy dominated by hydrocarbons
The Algerian economy largely relies on oil, with the non-oil sector representing less than half of total GDP. The Algerian cement sector is an important constituent of the construction sector, and has been gaining momentum over the past few years as the government focuses on spending to spur infrastructure projects.
Currently, there are twenty-five integrated cement plants in the country, operated by six cement companies, largely dominated by Groupe Industriel des Ciments d’Algérie (GICA) and LafargeHolcim, which account for over 50 percent and 28 percent of share in capacity, respectively.
With the current oversupply and with cement makers focusing on exports, ex-works prices which have declined by 12 percent in 2019, compared to the previous year, are expected to remain stable this year.
The Algeria Cement Market Report provides qualitative and in-depth market assessment and forecast of the country's cement industry, including cement volume trends in detail, trade flows, cement demand and production (historical and a five-year outlook), per capita consumption, and the competitive landscape. The report also comprises key players profiles, cement production facility details, including past and announced brownfield production increases and greenfield projects. Find out more about the report here.