Signs of resolution for the cement industry

The soaring price of cement seems to be leveling off after local suppliers upped production to meet demand, industry experts have claimed.

Mix mastered: the price of cement seems to be under control as local suppliers have upped their production to cope with demand. (Valeriano Handumon/AT
Mix mastered: the price of cement seems to be under control as local suppliers have upped their production to cope with demand. (Valeriano Handumon/AT

The soaring price of cement seems to be leveling off after local suppliers upped production to meet demand, industry experts have claimed.

Earlier this year, the demand for cement was outstripping supply across the GCC.

Because of high freight costs and a lack of locally produced materials, the cost of cement reached record highs. But a new report produced by Richard Feraud, managing director, Quadra Trading, says that the situation seems to be resolving itself.

 

Feraud claims that the GCC countries may soon have a surplus of cement and could be looking to export the product.

During June and July, official figures show the cost of cement rose to US $80.31 (AED295) per tonne, although Feraud estimated it could have been as high as $100.

The price of cement has now dropped to $70.81 per tonne.

"Many local producers responded to the demand by increasing production," said Feraud. "Earlier this year, demand was very high because the amount of imports was not able to contribute significantly to meet the demand.

"Because of this the local industry, especially producers in Saudi Arabia, attempted to balance the gap between supply and demand."

In June, the UAE government introduced a price cap on cement at $80.31 per tonne after it was feared that many major projects would be delivered late or over-budget because of the cost of cement.

Feraud believed that this measure was not the reason for the fall in prices.

"When the price cap was introduced, many importers just used a kind of ‘window dressing' to get around the situation," he added.

"A company would import it, then would sell it to a subsidiary company at the price-cap level, before selling it to a construction company at a higher price.

"Although officially the price of cement was $80.31 per tonne during the third quarter of this year, in reality it was nearer $93 per tonne."

A local company which has acted to meet the demand is Nael General, which has opened a new cement plant in Al Ain.

General manager Joseph Varghese said: "During June, July and August there were some severe shortages in the industry and we were hearing that some construction companies were having difficulties in getting cement on time.

"There have been improvements recently and we are hopeful our new cement plant will help make the situation even better."

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