UAE prices fall and demand drops

UAE prices fall and demand drops
Published: 13 October 2010

Dubai Cement companies serving the Dubai market are being buffeted by low prices and are seeking to sell their products elsewhere in the Gulf and Middle East to bolster their balance sheets.

Demand for cement in the emirate has dropped from more than 20 million tonnes in 2008 to 13Mt today, a senior industry executive said.

Antoine Duclaux, CEO of Lafarge Emirates Cement, has called on the authorities to assist the industry.
“Investors in the cement industry put US$4bn (Dh14.6 billion) into the sector over the past 10 years. The government enjoyed good relationships with the players, but current profitability is zero and in some cases negative. Something has to be done; some will be leaving,” he told Gulf News.

The price of cement peaked at Dh400 per tonne in 2008, prompting the government to cap it at Dh360. The price today is around Dh200 per tonne for cement ex-factory and ready mix products fetch about the same value proportionately in cubic metres.

“The ready mix sector will face consolidation. We expect some adjustments and need help from the authorities if they want the industry here,” Duclaux added.

The ready mix sector though has an advantage in as much as it is more mobile, Terry Mason, company manager for Lafarge Readymix Gulf, told Gulf News.

The company has three ready mix plants, one each in Dubai, Sharjah and Ajman, with a total capacity of 1.5Mm3 a year.

It is looking at new opportunities by sending products and machinery to Oman, Saudi Arabia, Kuwait, Jordan and Iraq.

“Here we’re working now with the same few guys. Although the market has picked up a bit, one can’t plan ahead,” Mason added.