Cement production output and prices trends in Mozambique

Abstract

Cement plays a key role in construction of infrastructures around the world. Indeed, it is regarded as one of the most important materials. Its role in the construction industry in Mozambican is even much more significant than in other countries due to the entrenched construction conception, practices and customs. As such, the share of cement cost in the total construction cost has been very significant. Whenever cement prices fluctuate, there have been tremendous impacts on construction costs and, consequently, on its demand. The resulting shock waves propagate through the economy in general as well as housing and labour markets, in particular. There has been a perception that relatively high cement prices are due to the local low production capacity. Recent years have witnessed huge increase in cement production capacity as a result of good economic growth and good economic prospects. This research analyses cement prices and production capacity trends over the last ten years in Mozambique in an attempt to determine any sort of association among the two variables. Preliminary results suggest that cement prices have had some relationship with production capacity in the current context. Without the significant production capacity increase over the last years, prices would have soared tremendously, given the strong association of production costs with currency value. However, the strength of relationship between production capacity and prices has not been determined due to the fact that there are many other factors at play, which require a detailed assessment.