About 10% fall in cement prices as demand drops

Cement prices in the UAE have fallen by almost 10 per cent since the last week of December due to declining demand. According to experts, prices could witness a further correction in the forthcoming months.

Currently, cement prices in the UAE range between Dh340 and Dh400 depending on the urgency and payment method.

According to Joseph VJ, sales manager at Cemex, "Cement prices have fallen by about 10 per cent in January compared to the last week of December. Demand for the product has reduced by almost 15 per cent."

A senior procurement manager of a construction company said factories have been sending fax messages about an impending cost reduction starting from the first week of January.

Many factories contacted by Emirates Business, however, said the prices have been fixed at Dh360 per tonne and there have not been any change so far. Following severe shortage and fluctuation the UAE Government had fixed the cement price at Dh360 per tonne and Dh16 per bag.

Factories have, however, not ruled out the possibility of a reduction. "Demand so far has remained the same and hence there has not been any major cuts in daily production. We are analysing the market situation and expect the conditions to deteriorate," said a senior sales official from cement factory based in Ras Al Khaimah.

Many ready-mix and concrete firms have already started cutting production by about 20 per cent.

While most factories are selling bulk cement at around Dh360 per tonne, bags are priced at Dh16 and an additional dirham levied as transport. "Traders are, however, selling imported cement at Dh340. Some even sell it around Dh400. It all depends on the method of payment. If the client has no cash for immediate payment, cement is sold at a much higher price," said S Sulaiman.

Ajay Mathur, General Manager of Emirates Thermostone, which manufactures AAC blocks, said cement prices would further ease and the impact will only be visible during the second half of 2009. "Most imported cement comes in bags, whereas the demand mostly is for bulk cement, which only the local suppliers can provide," said Mathur. The company produces almost 1,300 cubic metres of AAC blocks per day.

The UAE cement market showed good improvement in 2008. The total cement consumption of 17.24 million tonnes in 2007 went up to 21 million tonnes in 2008. Also daily sales of the cement producers group went up to 77,882 metric tonnes, which was the highest ever. It was around an average of 52,000 metric tonnes a day in 2007.

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