Rosy future for cement despite slowdown

The CEO of Cemmenterie National, Lebanon’s biggest cement producer, sees a bright future for the sector despite a slump in local demand and exports. In an interview with The Daily Star from the rooftop of Beirut’s Bristol Hotel, which was built by his family in the 1950s, Pierre Doumet admitted that demand for Lebanese cement has been falling on both local and international markets due to regional instability and eurozone economic woes. “We expect the demand on the local market to recede by at least 15 percent,” he said, noting that exports have fallen drastically in 2012. Exports to Spain and Portugal, for instance, have been completely halted, he added. The summer season, when cement sales usually skyrocket in Lebanon, began very slowly this year, Doumet said. Cement prices, he added, were expected to fall by as much as 20 percent compared to last year. Doumet agreed that a key reason for the downturn in the cement business was that real estate investors have been reluctant to kick-start large projects amid a slowing economy. “Look at the hotel we are in today. It is basically empty,” he said, highlighting a general decline in economic activity that has particularly affected demand for cement. The crisis raging across Syria, a major market for Lebanese cement, has had a negative impact on the sector, Doumet said. “Besides falling demand, cement deliveries to Syria have become much harder to make and more expensive. We are forced to send some shipments by sea, but this has not been very successful so far,” he said. “Instead of the hundreds of thousands of tons we usually export to Syria every year, we will export less than 100,000 tons this year,” he added. But faced with what he described as a “cyclical slowdown,” Doumet said the sector had the capacity to prevail. A key to passing the difficult times is to tap booming markets where demand for cement is growing. “We are seeking markets in many places including Algeria, Libya, Nigeria and elsewhere,” he said. “But longer export routes mean less profitability for the sector.” However, despite the slowdown, the Lebanese cement sector retains major strengths. “Lebanon enjoys very clean limestone deposits, the key natural resource for our industry. We are also very well-suited on the Mediterranean for export and import activities,” Doumet said. In addition to abundant natural resources, the Lebanese cement industry has become among the most experienced in the world, he added, noting that the company’s competitiveness has been boosted by a team of highly skilled engineers and endorsing new technologies. Total capital expenditures, he said, reached $381 million by the end of 2011. Yet the soaring cost of fuel remains a serious challenge to the highly energy-intensive manufacturer, while competitors in the region and elsewhere, including Egypt and the Arab Gulf states, benefit from very cheap energy alternatives, including natural gas. “We utilize coal and petroleum coke that we import from the U.S. which is very inefficient,” he said. “We offered the Lebanese government a win-win project to utilize waste as an energy source for cement plants,” he said “but every time they ask for additional time to ‘study’ the initiative.” From TheDailyStar