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Economy

January cement consumption hits 17-month high

Bamburi Cement
Bamburi Cement plant in Mombasa. FILE PHOTO | NMG 

Cement consumption recovered from a dismal run to a surprise 17-month-high in January, taking pressure off manufacturers of the commodity who have been increasing production capacity over the years.

Data from the Kenya National Bureau of Statistics (KNBS) shows that January consumption hit 528,904 tonnes, marking the second straight month of recovery. The last time consumption was above this level was in August 2018 at 531,119 tonnes.

The recovery came as a relief for cement producers in the country who have been increasing clinker capacities despite declining demand.

Bamburi Cement #ticker:BAMB Managing Director Seddiq Hassani described the January figure "a surprise", saying December and January are generally low months for the industry. Incidentally, real estate firm Hass Consult had also said in February that it had recorded high sales of homes in January.

"I don’t see what could be the driver of such high consumption in January because there were no specific big projects to deliver such a number given even the standard gauge railway project stopped," said Mr Hassani.

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"This is surprising because January is usually not a strong month because of school fees payment after Christmas."

Kenya’s cement manufacturers Bamburi, the now-acquired ARM Cement, Mombasa Cement, East African Portland Cement Company, Savannah Cement and National Cement — have all been increasing their capacity, defying a decline in consumption.

The country’s total capacity stands at above 13.2 million metric tonnes.

Kenya’s overall cement production hit a five-year low of 5.88 million tonnes in 2019, increasing the idle capacity of the country's factories as export outlets shrink.

KNBS data shows that production dropped from 6.02 million tonnes in the 12 months to December compared to the previous year.

The drop in production was in sync with a drop in consumption from 5.9 million tonnes to 5.82 million over the same year, lower than a high of 6.3 million tonnes in 2016.

Production had grown from 6.33 million tonnes in 2015 to hit a peak of 6.71 million tonnes in 2016, being a period that coincided with key government projects such as construction work on the standard gauge railway (SGR).

In 2019, the drop was recorded despite mega infrastructure projects such as the Lamu Port-South Sudan-Ethiopia-Transport (Lapsset), rail upgrade works in various parts the country as well as continued development of buildings.

Despite the low consumption, the industry recorded back-to-back improvements in production in December and January. It produced 530,404 tonnes in January, also the highest in 17 months.

This marked the second month in a row for consumption to be above production. The last time this happened was in July last year.

Between 2005 and 2017, cement production averaged 356,287.55 tonnes, with a record low of 154,781 tonnes in January 2005 before reaching a peak of 584,780 tonnes in November 2016.

The Covid-19 global pandemic, which has led to restrictions in business and movement, is expected to further put pressure on cement production and consumption following the suspension of many real estate and infrastructure projects.

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