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After seven years of using a fuel mix of coal and wastes, some cement manufacturers are considering depending again on natural gas. This suggestion will be affected by many variables, such as the prices of two commodities, considering the shipping costs of importing coal compared to the availability of natural gas in Egypt and the availability of injecting natural gas to the factories. We have seen before some demands to decrease the natural gas price/mmbtu, yet the price did not change.
Cement manufacturers’ demands to re-use natural gas will be subject to the Ministry of Trade & Industry approval. We think reaching an efficient cost structure will help cement companies deal with the industry struggles whether the relatively higher production costs or the difficulty to export, especially that the cement industry is not included in the export incentives program which make it harder for exporters. We remind you that the effect of cutting production capacity for cement manufacturers will be reflected in Q3 2021 financials.
To sum up, the decision to use natural gas again will be affected by the availability of natural gas for cement manufacturers and the price differential between coal and natural gas.