Shoddy construction
Demand for construction materials did not cease during the revolution, reports Ahmed Kotb
Like many activities, production at construction material factories has come to a standstill since 25 January. According to Mohamed Hanafi, general manager of the Chamber of Metal Industries at the Federation of Egyptian Industries, steel factories were unable to function because of the curfew, and later because of strikes by some workers demanding better wages. "Transporting steel from piers to the factories and from factories to distributors can only be done at night, because heavy trailers are not allowed on the roads at all times, and the curfew stands in the way," Hanafi said.
Hanafi added that suspension of banks' operations starting 31 January also made it impossible for the steel factories to continue working because all their transactions take place through banks.
The situation at cement factories was not much different according to Ghada Rifki, an analyst at Commercial International Capital Holding (CI). "Cement factories cannot operate because they cannot get the limestone necessary for the production of cement," Rifki said, adding that factories get limestone from mountains, and the army supervises the process which includes the use of explosives. "Now that the army is busy running the country's affairs, cement factories cannot get limestone and production is stalled," she added.
Moreover, president of the construction materials division at Cairo Chamber of Commerce (CCC), Ahmed El-Zeini, said that the 12 cement factories operating in Egypt ceased production between 28 January and 11 February. Even today, "some of these factories did not resume their operations due to the frequent closure of banks and strikes by workers," he said.
Yet, a strangely high demand on construction materials, especially steel and cement, starting the beginning of the revolution, made it clear that some construction was taking place. According to the daily Al-Ahram, more than 55,000 illegal buildings on agricultural lands have been recorded between 28 January and 16 February, eating up more than 2,500 feddans of agricultural land.
Such illegal constructions took advantage of the absence of the police forces and the government's regulatory bodies. "Steel and cement retailers, who had a stock available from before 25 January, are taking advantage of the shortage in supply to raise prices," Hanafi said.
In some places, retailers sell a tonne of steel rebar at LE8,000, up from LE4,500, the factories' official price. Likewise, a tonne of cement is going for LE1,500 rather than the regular price of LE550.
"Customers come to buy small quantities and I am sure it is for illegal buildings," says El-Sayed Mahmoud, a steel retailer. "All large-quantity deals have stopped since 25 January," he said. Mahmoud further admitted that he had to increase the prices in order to compensate the losses resulting from the absence of larger deals.
"Retailers are not alone in taking advantage of the present situations in the country," El-Zeini said, adding that there is only one cement factory in Egypt that is government owned. All of the cement factories except that one, he added, raised the price per tonne by LE25 to LE40. El-Zeini says that even the original price of LE550, roughly $100, per tonne is much overpriced and is considered one of the highest prices in the world. "The cost of producing a tonne of cement never exceeds LE270, and they sell it at LE550," he said, adding that the tonne is being sold in Turkey for $55. El-Zeini requests army intervention in setting a limit to profit and obliging cement factories to abide by it.
"The illegal construction helped buoy the market despite the events," Rifki stated. "The effect on the market is temporary, though, because unlawful constructions will not continue forever," she stressed.
The Ministry of Agriculture and Land Reclamation announced on Sunday that a series of penalties will be imposed on land owners who illegally built on their agriculture lands. The penalties include not receiving manures or subsidised crops. Also, offenders will be subject to tough fines, and their buildings will be subject to demolition.
Egypt currently produces 50 million tonnes of cement and nine million tonnes of steel rebar per year.
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