Prices for imported cement in to the UAE dropped by Dh1 per bag, following the news of large cement consignments coming to the UAE ports in the near future. Price for a 50kg bag of imported cement was quoted at Dh14 yesterday. According to industry sources, decline in cement prices indicates easing out of cement crisis in the country.
Two major Dubai-based cement importers have contracted heavily in the international markets to keep up the supply intact in UAE. Around 100,000 tonnes of cement is expected to pour in to the UAE which will further help to reduce the prices, sources said.
Importers are reportedly shipping the commodity from the Far East and Middle East, with Egypt in particular emerging as the most favoured import destination. Also, various timely measures taken by the Government of Dubai helped to ease out the situation, including the duty waiver to exempt cement imports from five per cent customs tariffs. More recently Ports, Customs and Free Zone Corporation offered discounts on port handling charges for cement shipments coming to Dubai Ports as part of the new scheme initiated by Nakheel in collaboration with Dubai Islamic Bank, which offered six months credit to importers to encourage imports of the commodity into the UAE.
Currently, local cement prices are hovering at Dh15 per bag, ex-factory and delivery prices are in the range of Dh16 to Dh17 per bag. The bulk cement is priced at Dh280 per tonne, ex-factory and delivery prices are quoted in range of Dh290 to Dh300 per tonne.
Another factor which would add in easing out the pressure on cement prices would be the unanimous decision taken by local cement producers to abstain from exporting cement. Earlier this week, cement factories in the UAE agreed to stop exporting cement until the situation in the local market stabilises.
Statistics from a local cement producer show that cement prices have been on roller coaster ride for quite a few years now. The average cement price for the last eight months works out to Dh200 per tonne and this level was achieved in 1995. Prices, further moved up to the highest level of Dh206 per tonne a year later and then on plummeted to a level of Dh118 per tonne in 2000. Cement prices have been on rise since 2001, when the average price was Dh120 per tonne, then rallied from Dh130 per tonne in 2002 and Dh150 per tonne in 2003 to reach Dh200 for only the first seven months of this year.
Meanwhile, emergence of potential cement capacities in the Northern emirates is expected to help in keeping both supply and prices consistent in the long run, sources opine. The total clinker grinding capacity in UAE is expected to shoot up to 15 million tonnes by 2007.
The existing grinding capacity in UAE is placed at 12 million tonnes per year, which is expected to move up in a few years by three million tonnes. Among the prominent expansion plans in the pipeline is the establishment of the new cement plant in Abu Dhabi by Emirates Trading Agency (ETA) with the total capacity of 600,000 tonnes as a part of phase-I involving an investment of $21million.
According to some estimates, the total requirement for cement in the UAE is around 10 to 11 million tonnes per year. Much of this, 95 per cent, comes from local producers, while only five per cent is imported from abroad. Currently, there are five to six major cement importers in the country.