Oman is expected to witness increasing exports this year thanks to demand from markets like Yemen and East Africa, a new research report has forecast. Raysut Cement is expected to be a major beneficiary as exports accounted for 32 per cent of sales in 2011, states the report by EFG Hermes.
Domestic cement consumption, meanwhile, is expected to rise by seven per cent during the current year to 6Mta with local production being able to meet demand. Domestic production this year is estimated to be 6.6Mta including a new cement company located in the Buraimi region with 0.8Mta production capacity, the report added. In 2011, imports met 25 per cent of cement demand in Oman, mainly from UAE.
Cement prices for local players declined by 19 per cent over last year and now stand at an average of OMRO25/t but EFG sees a stabilisation in local prices going forward. “Low-price imports from the UAE pressured local players to reduce their prices. As per our estimates, recent cement price increases in the UAE market (in the range of 10-15 per cent) would help to stabilise cement prices in Oman, which we expect to marginally improve to OMR26/t." The report adds: "The increase in UAE cement prices will help improve sales volume of Omani players, as the cost advantage of UAE cement reduces.”
Furthermore, the EFG report noted that the government’s consistent infrastructure spending is seen as a major catalyst for cement demand in the country. The government has announced a budget worth OMR10bn for 2012, 14 per cent higher than previous year, with a major concentration (worth OMR1.7bn) to be spent on infrastructure development throughout the country.