|
|
|
With the demand for concrete falling in the Middle East, so has the price of the material. But how large is this decline and what changes are the manufacturers and suppliers making in order to maintain their market positions while meeting contractors needs? Construction Week finds out.
Over the past few years the demand for concrete soared to levels that far outstripped the available supply. The result of which meant that the cost of this material grew exponentially, as contractors and developers paid the price to ensure that their project schedules could be met.
To counter the effects of demand, price caps on cement – the primary raw material of concrete – were introduced in the UAE to try to control the price rise and inflation, and manufacturers across the region expanded their operations and cement production.
Story continues below 
But after just a few months into 2009 there has been a sharp downturn in demand from certain areas of the Gulf as major projects are cancelled or put on hold.
This has meant welcome relief to buyers as material costs have inevitably fallen and some concrete manufacturers are also welcoming the slowdown as a time to take stock and make changes including the introduction of new products, a move towards more environmentally friendly technologies and a focus on other sectors within the construction industry. But how much have concrete prices actually been affected and what does the future hold for the sector?
Price changes
Made from a combination of materials, concrete prices are intrinsically linked to the cost of these raw components, the largest of which is cement. Other factors such as transportation also play their part in the price of concrete as its short shelf-life means it is susceptible to immediate changes in, for example, the cost of fuel.
“For all concrete products, the basic raw materials are cement, sand and aggregates; as all of these prices have fallen, the price of concrete products in general have fallen accordingly,” explains Dubai Precast general manager Matti Mikkola. “Cement plays the major role, with a cost factor of more than 40%,” he adds.
But just how dramatically have concrete prices fallen and is this set to continue? “In general, it appears that prices haven’t fallen as sharply as expected following the global economic downturn. In theory prices should have fallen significantly, but they haven’t.
We’re not seeing [drops in cement prices and demand] being translated by contractors. We should be looking at a 40% decrease in price between August and now and we’re not,” reports a spokesperson from global construction consultancy Davis Langdon. In fact, the cost of C45 between August 2008, when prices were at their peak and April 2009 has dropped by only 9% in the UAE according to statistics gathered by Davis Langdon.
There is no overall evidence as to why a steeper fall in price has not occurred, however one of the most plausible theories is due to the over-inflated prices of the previous years. “In 2008 there was a very sharp increase up until August/September, and then the Government imposed an AED 360/tonne price lock,” explains the Davis Langdon spokesperson.
“The change [has been] more acutely felt in the UAE, where price fluctuation has been the most dramatic,” states Gulf Precast Concrete technical and commercial manager Elias Seraphim.
“Cement price fluctuation has affected the price of all concrete products, increasing in 2008, then decreasing by 2009 and [it has been] stable for the last three months,” he says. “This drop has been more drastic than we have experienced in the last ten years – obviously it is partly caused by the dramatic and sudden rise last year,” adds Mikkola.
The number of projects construction companies are undertaking and the difference in demand and supply are also factors in the price, reports Plaxit Dry Mix sales and marketing manager Manoj Kaipura.
Page:
1 2
| Articles | |
| Companies | |
 |
Site Map
 |
 |
 |
 |
|  |
\
FEATURED COMMENT
require current prices in ghana for concrete, aggregates, and sand (accra region)