UAE: Times are tough for cement firms as prices fall and demand drops

Dubai: Cement companies serving the Dubai market are being buffeted by low prices and are seeking to sell their products elsewhere in the Gulf and Middle East to bolster their balance sheets.

Demand for cement in the emirate has dropped from more than 20 million tonnes in 2008 to 13 million tonnes today, a senior industry executive said.

Antoine Duclaux, CEO of Lafarge Emirates Cement, has called on the authorities to assist the industry.

The Lafarge Cement Factory in Dubai. Demand for cement in the emirate has dropped from more than 20 million tonnes in 2008 to 13 million tonnes now, a senior industry executive said.

"Investors in the cement industry put $4 billion (Dh14.6 billion) into the sector over the past 10 years. The government enjoyed good relationships with the players, but current profitability is zero and in some cases negative. Something has to be done; some will be leaving," he told Gulf News.

The UAE has 20 cement companies — 10 large ones and 10 grinders. On the ready mix side, 45 players with a capacity of 23 million cubic metres a year in 400 plants across the country are competing for a smaller pool of clients.

"They are all still in the game but with difficulties. Prices had to be adjusted so profitability is poor. Many export to Oman, given the growth. But cement sales in Oman are also challenging," Duclaux added.

Price per tonne

The price of cement peaked at Dh400 per tonne in 2008, prompting the government to cap it at Dh360. The price today is around Dh200 per tonne for cement ex-factory and ready mix products fetch about the same value proportionately in cubic metres.

"The ready mix sector will face consolidation. We expect some adjustments and need help from the authorities if they want the industry here," Duclaux added.

The ready mix sector though has an advantage in as much as it is more mobile, Terry Mason, company manager for Lafarge Readymix Gulf, told Gulf News.

The company has three ready mix plants, one each in Dubai, Sharjah and Ajman, with a total capacity of 1.5 million cubic metres a year.

It is looking at new opportunities by sending products and machinery to Oman, Saudi Arabia, Kuwait, Jordan and Iraq.

"Here we're working now with the same few guys. Although the market has picked up a bit, one can't plan ahead," Mason added.