UAE production expected to surpass demand by 2011

UAE production expected to surpass demand by 2011
Published: 08 December 2008

In an optimistic scenario, a recent Al Mal Capital report on the cement sector in the UAE anticipates a construction sector growth of 25 per cent and 20 per cent in 2008 and 2009, respectively.

This is one of the three possibilities examined in the study regarding the growth of the construction industry and the demand for cement.

In the most possible case, the report expects the construction industry to experience a nominal growth of 20 per cent in 2008 and 15 per cent in 2009, while cement consumption should grow in line with construction at a rate of 32 per cent in 2008 and 15 per cent in 2009.

"In our pessimistic scenario we have forecast slower growth of 15 per cent in 2008 and 10 per cent in 2009," said the report.

The UAE construction industry has experienced phenomenal growth since 2003.

"The UAE GDP composition shows the construction industry increased by 29 per cent in 2006 and a further 29 per cent in 2007. Amid the liquidity crisis and global recession woes we anticipate construction grow rates to slow down. Developers may find it increasingly difficult to fund projects and there could be an increasing number of projects being delayed or postponed," it added.

Based on the most probable construction forecast of cement consumption estimates and expansion plans of cement and clinker producers, the Al Mal report envisages the production of cement to surpass consumption at the end of 2010 or the beginning of 2011.