Deutsche Bank bullish on Middle East cement
Having recently looked at the Middle East cement market in some detail, Deusche Bank analysts conclude that over the next two to three years demand will be better than expected and, moreover, new supply will be smaller than had been promised. As a result, the Middle East should retain its role as a major import destination, absorbing spare cement globally and pushing global prices higher.
Demand is also stronger – note the analysts – and in many countries like Libya, Iraq and Morocco, demand is rising more quickly and so imports into these countries are increasing.
Meanwhile, the UAE is still booming and importing heavily, despite new capacity coming on-stream. Most Gulf cities are trying to emulate the Dubai business model, with (cement-intensive) massive infrastructure projects.
Rather interestingly, Deutsche Bank analysts say that Middle East new capacity has been overstated, with less than half of announced capacity likely to come on-steam. Furthermore, new capacity from local producers is being delayed as the order books of cement makers are currently full.
Deutsche Bank concludes by noting that the market supply-demand should thus remain excellent. The Middle East is also key to high global cement prices and this scenario bodes very well for global groups such as Lafarge and Holcim. Accordingly, in the short term, continuing high levels of imports into the Middle East should help to underpin a global round of H207 price increases.
Published under Cement News
