Cement use up 18pc on rise in construction activities – Business Daily
Cement consumption grew 18 percent in the half year ended June, driven by increased construction activities in the private sector. FILE PHOTO | NMG
Cement consumption grew 18 percent in the half year ended June, driven by increased construction activities in the private sector that defied a surge in cement prices.
Latest data from the Kenya National Bureau of Statistics (KNBS) shows that 4.97 million tonnes of cement were used in the six months from 4.06 million tonnes consumed in a similar period last year.
The higher consumption defied a sharp rise in the cost of the product, where the retail price of a 50-kilogramme bag of cement has increased by at least Sh300 since March on rising costs of raw materials.
Private sector construction projects have been picking up this year after being held up since 2020 due to the Covid-19 pandemic, which not only disrupted building sites due to movement restrictions but also caused a dip in demand for housing and office space as thousands of Kenyans lost their jobs.
In its half-year financial report released late last month, listed cement maker Bamburi Cement pointed to higher volumes in the period, which helped it grow its turnover by 2.6 percent to Sh20.1 billion.
“This was driven by volume growth along with improved average selling price compared to the prior year,” said Bamburi in the report.
The firm however pointed at headwinds in the form of higher imported input prices, which if persistent will likely not just affect the profitability of cement makers but also start to eat into demand due to high retailer prices.
Cement manufacturers increased prices of the commodity citing the higher cost of raw materials— especially coal that is used to make clinker—due to the Russian invasion of Ukraine. Russia is one of the biggest producers of coal in the world.
But the high input prices failed to upstage activities in the real estate sector, with the value of approved construction projects in the six months to June nearly doubling to Sh85.23 billion from Sh44.17 billion in a similar period last year.
Credit advanced by banks to the real estate sector also grew by 13.9 percent in the year ended June, pointing to the continued recovery of one of the worst hit sectors by Covid-19.
The revival of private sector projects is timely for the cement firms, now that major public infrastructure projects such as the Nairobi Expressway and the Mombasa bypass at Dongo Kundu that had driven demand in the past few years are either complete or nearing completion.