Gulf Extrusions Company expects less UAE construction activity in 2011
Gulf Extrusions Company sees declining demand for aluminium extrusion products from the UAE construction industry, as a glut of new builds is undermining construction activity.
Usage will decline further in 2011, after demand last year fell from the levels seen during the 2007 construction boom that ended in 2008.
“Demand for aluminium extrusion product stood at around 100,000 tonnes in 2010. This year, we expect for around 85-90,000 tonnes,” said Modar Mohamed al-Mekdad, general manager at Gulf Extrusions at the MEED Middle East Aluminium 2011 conference on 16 March.
In 2007, UAE demand stood at 180,000 tonnes a year. Producers responded to the construction boom by expanding capacity, much of which is now idle.
“Today almost 50 per cent of capacity is surplus,” said Al-Mekdad, who expects his company’s 2011 output levels to be about the same as the 2010 output of 50,000 tonnes.
Local producers have tried to mitigate the impact of the construction slump by exporting, but transport costs make shipments to markets outside a 1,000-kilometre radius unfeasible, he added.
As a consequence, local producers have shifted to their attention to regional markets less affected by the global downturn, such as Saudi Arabia, where the government implemented a $52bn stimulus package which put a heavy emphasis on construction.
Qatar’s anticipated construction boom in the wake of the award of the Fifa World Cup in the country in 2022 will also lead to increased demand for aluminium extrusion products, said Al-Mekdad.