【Part One】Future Proofing - North Africa Sets for Tile Growth
In the last few years, the three major North African ceramic tile markets outside of Egypt have grown relatively modestly. Perhaps as a combination of political stability and financial insecurity, these expanding population bases have not really matched their personnel development with industrial growth and construction activity. However, things seem on the turn and the next decade could see unprecedented levels of consumption. Already, investments have been made in expansion, and there could well be a substantial increase in this situation as the countries look to become more self sufficient, and also begin to exploit more fully the export possibilities just across the Mediterranean, as well as to sub-Saharan Africa. With heavy clay investment also improving, this is a clear sign that building and construction has signaled a brighter future. Undoubtedly then, ceramics seem set to follow?
Currently, Morocco, Algeria and Tunisia together account for 175 million square metres of ceramic tile consumption. North African ceramic tile producers have immensely benefited from the steady construction sector of the region. The trend continues, despite the disruption in one of the key market, Libya, which has been rocked by the civil war in Libya.
The improvement in the socio-political conditions and the North African industry's capacity for recovery is confirmed by the various reports. These reports reveal that 2016 saw a sharp increase in the number of large construction projects (both in commercial and residential segments). A number of these projects will become operational in 2018 and lead to steady ceramic tile demand in the respective countries.
Huge investment in tourism and hospitality sector to diversify the economies in North African countries is expected to play a key role in the growth of ceramic tile consumption in the region in next few years. Moroccan government is heavily investing in tourism sector with an aim to become a top-20 tourism destination by 2020. Similarly, Tunisian authorities' investment in areas of medical and cultural tourism and ecosystem has led to growth of ceramic tile consumption in the country at steady rates in last few years.
Largest ceramic tile market in the North Africa, Moroccan ceramic tile consumption registered a growth of about 5% (actual figures 4.85 %)in the year 2016.
Catered by ten large and mid-scale producers, Moroccan ceramic tile manufacturing industry has struggled in last two years, mainly on account of high production cost. Despite, a steady demand of ceramic tiles in domestic market, local tile producers are unable to meet the demand, primarily because of high production cost due to high natural gas prices in the country. Cumulatively accounting for about 90 million square metres of installed capacity, most of the ceramic tile producers operate at low capacity utilistion rates. In 2016, the domestic demand at 88 million square metres registered a growth of 4.8 % as compared to 2015. However, a big part of total demand is met through imports from Egypt, Spain and China. In 2018. Morocco imported 24 million square metres of ceramic tiles.
Morocco in Focus (m. sq metres)
Natural Gas prices have been one of the largest impediments, which has hampered the growth of ceramic tile manufacturing in Morocco. According to Super Ceram's CEO, Fouad Benzakour, "Moroccan ceramic producers have been handicapped by the high cost of energy. Regional competitors in ceramic tile manufacturing in Egypt and Algeria get natural gas at about 500 Dh/ton. Even In the Europe the natural gas cost about 4000 Dh/ Ton, but we in Morocco get the gas at about 12,000 Dh/Ton. In order to save on the fuel we had to invest in a new kiln. Which is equipped with technology for recycling hot air. Though, the new kiln would save us about 1,000 tons off fuel/year, but the capital investment for this equipment was substantial."
Huge imports of ceramic tiles have upset the domestic tile producers in recent years. All the major producers have been taking various measures to reduce the cost of production by going through technology upgrades. Imports of tile from Spain, which gained momentum after 2010 have cornered a large share in the Moroccan ceramic tile market in last three years. Spanish ceramic tile producers in particular have a large share of total tile exports in Morocco. In 2016, Spanish exports to Morocco amounted to 78.9 million Euros, a jump of 13.6 % as compared to 2015, when Spanish producers exported 6&.6 million Euros worth of ceramic tiles in Morocco.
Major producers who have been urging the government to impose anti dumping duties on ceramic tile imports from Spain received a jolt in last November when Ministry Industry and Commerce of Morocco published a notification which closed the anti-dumping case against the ceramic tiles industry in Spain, without any measures for the industry. Moroccan ceramic tile producers have made a number of attempts to get anti-dumping investigation on ceramic tile imports from Spain. However, after several attempts on May 12, 2016, an anti-dumping investigation was opened against the Spanish ceramic tile industry, which culminated in rejection of the plea of domestic producers in November 2017.
Sources from Asian Ceramics AC18-1 Edition