UAE cement import falls on excess stock

UAE cement import falls on excess stock
Published: 03 December 2009

Cement imports into the UAE have dropped significantly, due to the drop in prices of locally produced material and excess stock.

Producers and traders in the UAE say they are preparing for more tough times ahead, as they continue to remain clueless about the future course of the construction sector. Cement in the UAE is currently sold between Dh190 and Dh210 /t and a 50kg bag is sold at Dh12.50.

Rajesh Bhatia, Managing Director of Rashidco Cement Company, a supplier of cement and wood materials in the UAE, told Emirates Business that cement imports mainly from Pakistan has dropped significantly.

During the last few years, China, India and Pakistan were major exporters of cement to the UAE.

Following a ban by the Indian Government on cement exports, Pakistan increased its exports into the UAE. In 2008 Pakistan exported cement to the UAE at $70-75 (Dh257-275) a tonne. "Last year, imports from Pakistan and other countries into the UAE had peaked as the local market experienced a significant shortage of cement coupled with increasing prices. Imports then worked out to about 25 per cent cheaper compared to local prices," said Bhatia.

Last available figures show that imports shot up to 2.96Mt in 2007 against the 1.704Mt in 2006 and 600,000t in 2005.

As a recent Nomura report said, Chinese clinker is available at $32 to $34/t versus $48 per tonne a year ago. "If we assume $19 as freight cost and $15 as grinding, storage and distribution cost, it would imply a landing cost of cement in the Dubai market at about $66 to $68 per tonne," it said.

"Today the situation has changed significantly. A significant fall in demand coupled with capacity expansion has resulted in excess stock in the market," said Bhatia.

Source:  Emirates Business 24/7 2009