Tunisia Cement Market

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EXECUTIVE SUMMARY

1.Country Overview

Tunisia, a country of 10 million people is bound by the Mediterranean Sea to its North and East, Libya to its South and Algeria to its West. Most of its population is concentrated in and around Tunis and towards the Eastern part of the country.

Tunisia attained independence from France in 1956 and currently has a rightist government headed by General Zine al-Abidine Ben Ali.

Tunisia's economy, traditionally based on agriculture, has diversified into mining, energy, tourism, and manufacturing sectors. Tunisia's manufacturing industries (located primarily in Tunis) include textile factories, steelworks, leather, food processing, paper, wood products, and construction materials. Tourism is also an important economic activity. Petroleum, phosphates, textiles, and olive oil are the country's leading exports. Its imports, which exceed exports, are headed by machinery, metal products, chemicals, food (particularly cereals), and transportation equipment. France and other European Union countries, as well as North African countries, are the main trade partners. The country discovered deposits of oil and natural gas in 1964. Tunisia also has large phosphate reserves and iron ore is found in small quantity. Zinc, lead, and salt are also mined.

With increasing privatization, simplification of the tax structure, and a prudent approach to debt, real growth has averaged 5.4% in the last five years. Tunisia recorded a record growth of 6.3% in 2007, however, this has fallen in 2008 to 5% and is expected to fall further in 2009, before improving from 2010.

2.Demand

Present Demand

Tunisia consumed 5.92 mio t of cement in 2008. Cement demand in Tunisia is concentrated in the Eastern part of the country with Tunis being the largest consumption center, accounting for roughly 27% of the demand.

Between 1999 and 2008, cement consumption has showed an average growth of 3.3% pa.

The primary driver for cement consumption has been residential housing construction, though of late, non-residential buildings and non-building construction have also grown considerably.

The growth in housing construction is a result of growing urbanisation, wherein more than 60% of the population is urban and is expected to be 70% by the year 2020.

However, cement consumption has also been constrained by the non availability of cement from time to time. This has mainly been a result of the domestic price control exercised by the Government, due to which plants have found exports more attractive than domestic sales. All new capacities sanctioned by the government are now subject to the condition that at least 70% of the output would be sold in the local market.

Estimated Regional Distribution

Future Demand

Cement demand has been separately estimated for normal construction demand and the demand from mega projects. Total demand including mega projects is expected to grow at a higher CAGR of ~ 6% in the next 10 years.

3.Market Characteristics

CEM II is the most popular cement and accounts for around 54% of the sales. CEM I constitutes around 41%. These two types of cement thus comprise 95% of the cement sold in the market. The balance is Sulphate Resistant Cement (HRS).

Source: Holtec Analysis
Product Types in Tunisia

Approximately 85% of the cement is in bagged form. However, the share of bulk cement is gradually growing and is expected to be higher in the coming years.

Wholesalers are the largest customer segment, comprising almost 66% of the total. RMC plants and concrete product manufacturers are a distant second at 14%. Exports make up the balance.

Production and sales of cement is high in summer but drops sharply in winter due to the cold weather. Another lull in construction occurs during the Ramadan month.

The ex factory sale prices for bagged CEM I and CEM II are TD 75/ t and TD 70/ t respectively. Prices are the same throughout the country and are...
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