Cement market oversupply?

Cement market oversupply?
Published: 03 August 2004

Increased imports of cement have helped bring cement prices to a more rational level in the local UAE markets. But if the situation continues, it could cause the market to suffer from oversupply, industry officials warned. A number of traders have jumped into the cement business recently, primarily to cash in on the recent price hike in the market, Some traders are offering imported cement at Dh10-Dh12 per bag in the open market, which is putting pressure on local cement manufacturers who had earlier committed to a price band of Dh15 per bag for the local market.

"We are currently purchasing cement at a rate of Dh13 to Dh15 from the local market," said a senior purchasing officer of a local contracting company. "This is much lower from the Dh22-Dh23 price bracket that we used to buy in May-June.

The current cement price has come down to Dh12-Dh15 - from its peak of Dh22 to Dh25 per bag in early June - due to an increase in cement imports from new markets like Egypt, Iran, India and Pakistan, among others. A number of large contractors are directly importing cement from foreign manufacturers, to offset the additional cost of construction.

The price of cement in the local market had shot up to Dh25 from Dh9 per bag in May this year due to a supply shortage, precipitating a crisis in the UAE construction sector. With the intervention of the Ministry of Economy and Commerce and the UAE Contractor’s Association, the UAE cement manufacturers had agreed to bring down the price to Dh15 in June.

A recent survey conducted by the Dubai Chamber of Commerce and Industry (DCCI) identified ’monopolising the cement market by some traders and controlling supply’ as one of the key reasons for the unusual flare-up.