UAE producers hit by rising production costs

UAE producers hit by rising production costs
Published: 10 September 2009

Several factories in Fujairah and the Northern Emirates say their production costs have increased over the past few weeks even as cement prices across the UAE continues to remain stable compared to last week, reports Emirates Business.

Factories have, meanwhile, seen reduced demand due to Ramadan. Sales managers and representatives of many factories yesterday told Emirates Business they are hoping the situation would improve after Eid.

Cement is priced differently in each emirate, with Dubai continuing to sell cheaper compared to others.

A tonne of Portland is priced at around Dh230 in Dubai compared to Dh245 in Ras al Khaimah, Dh260 in Abu Dhabi and Dh300 in Al Ain.

Abdul Shakoor Mohammed Nurullah, factory manager at Rock Cement Industries, said: "There are various reasons why prices of cement vary across emirates. One crucial factor is logistics. Prices, however, have not changed much compared to last week. Factories these days review the price every 30 to 45 days."

An official of Sharjah Cement yesterday said that a tonne of grey cement is being sold at Dh245.

"The prices are for cement delivered to Dubai. Last week, the prices were the same. We are not expecting it to change," he said. According to him, the frequent breakdown of electricity supply in Sharjah has put pressure on the production cost. "We are all aware of the drop in demand. The prices, too, have fallen compared to the first quarter of 2009. We are hoping that the electricity problem would be rectified soon," he said.

According to another official from Fujairah Cement, the demand has dropped by 30-40 per cent compared to the same period last year. "With the increase in the price of coal and the shortage of power, production cost has also increased. Usually, during Ramadan the demand drops further, but we are not expecting any major change this year following Ramadan," said the official.

A Gulf Cement official said that they were selling cement for Dh260 (ex-factory price). The official at the RAK-based factory said that the prices have been the same and could drop further due to a supply glut. "In grey cement, there is quite an oversupply in the UAE. A cement bag is being sold at Dh14," he said.

Source: Emirates Business 24/7