UAE cement makers under attack for price hikes

UAE cement makers under attack for price hikes
Published: 11 June 2007

Manufacturers of concrete products used in the construction industry have renewed their attack on cement producers, saying they are given barely a week’s notice before prices are jacked up.  
 
Firms making products such as paving slabs and concrete blocks say prices of cement increase by more than Dh10 every fortnight, with very little notice ahead of each rise.  
 
They say such short notice gives them little time to find alternative sources and to review their commitment to potential long-term contracts.  
 
"We are given no more than a week’s notification that the price will go up. When you consider that we deal with long-term contracts, this just isn’t long enough. We’ve had four of five revisions in the last three months," said a spokesperson from a Jebel Ali-based maker of pre-cast concrete components. 
 
"Unless the price rise is due to a forced measure ... we should be given three months notification."  
 
The person did not want to be identified for fear of alienating the company from cement suppliers.  
 
Other firms contacted by Gulf News reported a similar scenario. The complaints follow recent allegations of a poor supply of cement being churned out by UAE factories, putting added pressure on prices and contract deadlines.  
 
Industrial consultant G. Prithviraj, managing partner at Dubai-based PRG Consultants, said short-term notice of price increases is a recent phenomenon. "In the past, the industry gave one month’s notification, which gave ample time to react and find alternatives supply sources Now suppliers are in a position to say ’take it or leave it’. There are few alternatives [for buyers] so they have to pay and suffer."  
 
Cement prices now range from Dh310 to Dh325 per tonne, depending on the size of a company’s order and the length of their association with the cement producer, according to industry reports.  
 
Prithviraj speculated that prices will hit Dh350 per tonne in four to six weeks, before going through a correction triggered by imports from overseas and increased production capacity at UAE factories.  
 
UAE cement makers and market analysts say cement price rises are due to huge demand from the construction industry in Dubai, and more recently in Abu Dhabi and Ras Al Khaimah.  
 
A dwindling supply and rising cost of clinker, a raw material, is another contributing factor, they say. Numerous cement factories in the UAE import clinker, making them susceptible to increased logistics costs.  
 
"Transport costs have gone up by 30-40 per cent in the three or four months," said a leading figure at a UAE cement factory.