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Increase in production surpassing demand has led to the fall in prices of cement in the UAE. As per the latest Construction Materials Price Index released by the Dubai Chamber of Commerce for the second quarter of 2014, the cost of this essential component in the construction industry has witnessed a 6.3 per cent year on year decrease. One ton of cement in the country is available at around Dh250.
However, the demand for cement is expected to shoot up leading to increase in prices. Capacity utilization in the cement factories is poised for an uptick as construction activity props up all over the emirates.
The construction boom prior to 2008 led most cement companies to enhance their productivity. But the real estate crash afterwards ensured that the supply was far greater than the demand.
With the capacity to produce more than 61 million tons of cement per annum, Saudi Arabia constitutes half of the GCC’s total cement capacity. The UAE is in second place, with an installed capacity of around 41 million tons of cement per annum. The northern emirates have high quantity of limestone deposits, a key element in the production of cement.
Steel prices, which also influence the construction industry, have remained stable in the UAE, following the global pattern. Industry experts believe the price of steel is not going to witness major fluctuations in the next couple of months.
However, the increase in freight rates has dramatically hiked the costs of other components of the construction industry in the UAE. These include wood panels, sanitary ware, and electrical materials and other materials used in the interior design of a building which are shipped from countries like China and Malaysia.
• UAE cement production higher than demand in local market
• Steel prices have remained stable following the global pattern
• Rising freight rates hike up costs of wood panels, sanitary ware
You may also check out when and why exactly construction industry boom times is back.
Source: S. Dhar, Special to Properties
The writer is a freelancer