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Massive cement production surplus in UAE may “delay” expansion schemes

“Unequal” price competition with imported products cited as reason

Massive surpluses of cement production in the UAE, which go beyond 30 million tonnes per annum, may “delay or stop” plans by local producers to expand their production lines in the future.

Industry sources also speak about a clear decline in the demand for local cement as a result of an “unequal” price competition with imported products, Al Ittihad reports.

Oversupply of cement products coupled with low demand at home remain the top challenges facing the local cement industry in the UAE, in addition to the rising costs of natural gas and electricity.

Experts say that most local cement factories cannot reduce production because most of them run single production lines.

This means that if a factory decided to stop a production line, it will still incur the cost of paying its employees while production is halted. So, companies will continue production even if there is a surplus.

Ahmed Abdullah Al Amash, director at Gulf Cement Company, says that he expects cement prices to drop further for many reasons – but mainly due to the lower demand by emerging regional economies.

He urges authorities to help producers explore new markets for cement products.

However, producers hope that the local construction boom and mega infrastructure projects, as well as ventures related to Dubai Expo 2020, will help in addressing the issue.

The aggregate production of more than 20 local cement factories surpasses 42 million tones, of which 12m tonnes caters to the local market.

The UAE’s 2014 cement exports saw a major surge in their value totalling AED3 billion, compared with AED1.5bn in 2013.