GCC Cement 2009: Facing up to over-supply

24 May 2009

Cement supply in the GCC is forecast to outstrip demand this year for the first time since 2005, according to the new MEED Insight report GCC Cement 2009.

This will be the result of a significant hike in capacity and the downturn in regional projects, the report says.

The regional industry has proven to be more resilient than first thought but MEED Insight says it is inevitable demand will fall, with more than $400bn worth of projects in the region cancelled or postponed

Cement capacity has jumped by an estimated 70 per cent to 85 million tonnes a year in early 2009, mainly due to substantial capacity expansions in Saudi Arabia and the UAE.

With a grim projects and contracting environment in the UAE, especially Dubai, cement producers will have to look to other, more robust markets for new business, the report says. In the first quarter of 2009, UAE construction awards slumped by 85 per cent with little sign of a significant upturn in the rest of the year.

To access sample content from within the report, please click on the link below:

Other markets with less exposure to real estate are expected to be more resilient. In particular, Saudi Arabia is set to push ahead with significant investment in infrastructure and housing.

The kingdom now has production capacity of more than 45 million tones a year (t/y), and is set to exceed 50 million t/y by 2010. Demand is still high; March 2009 witnessed the highest ever demand for clinker.

TABLE: GCC per capita cement consumption, 2008 (kg)

CountryAverage
Bahrain300
Kuwait659
Oman1,678
Qatar4,710
Saudi Arabia1,625
UAE5,098
GCC average2,345
Source: MEED

This information is taken from the MEED Insight report GCC Cement 2009: The drive for capacity. Gain exclusive insight on GCC market size and potential new opportunities, risk and key industry data from this report. To order your report today, download the order form (PDF) or email MEED Insight for more information, quoting reference CEM2.

Perhaps a more pertinent question facing producers is how to handle this fall in demand. For some, it will be a case of carefully managing their inventories; for others it may be a good time to consolidate. For a fortunate few, in states such as Bahrain and Qatar, where the market remains substantially under-served, a drop in demand will make little discernible difference.

The slowdown in construction is also placing a greater emphasis on exports. Having been a net importer since the 1950s, the region may soon find itself becoming a net exporter for the first time. Saudi officials complain that an export ban imposed in 2008 has prevented the kingdom from establishing a viable GCC and African market.

Cement prices in the GCC have risen from around $3.00 per 50kg bag in 2003 to $7.00 a bag in 2008. In early 2009, contractors forecast that cement prices in the UAE would fall 20 per cent by the end of the year.

Cement prices have proven more resilient than steel prices, which have fallen by around 75 per cent from the mid-2008 highs. Prices outside the UAE are likely to fall less because of tighter supply and continuing activity in the construction sector.

Report table of contents

ChapterPage number
Preface3
Executive summary4
Introduction6
Cement in the GCC8
Financial performance11
Drivers of demand14
Cement prices17
Investment19
Cement by country21
Bahrain21
Kuwait21
Oman22
Qatar22
Saudi Arabia23
UAE25
International players27
Imports and exports29
Environment31

Report tables and charts

Table/ chartPage number
World cement production and capacity6
GCC per capita cement consumption7
GCC primary cement production companies9
GCC cement production companies with state ownership10
GCC cement sector: financial performance11
Revenues and net income for 23 leading GCC publicly listed cement companies12
Revenues and profits of the core eight listed Saudi cement companies12
Core eight Saudi cement companies’ sales revenues12
Revenues and profits of public UAE cement companies13
Revenues and profits of Kuwaiti, Qatari and Omani listed cement companies13
Value of construction contract awards in the UAE and Saudi Arabia14
Middle East nominal GDP and current account surpluses15
GCC population forecasts15
CC GDP, 2003-1016
The GCC projects market, May 200816
GCC cement prices17
GCC cement and ready-mix concrete prices18
GCC cement supply and demand18
Cement investment by country and status19
Selected cement projects20
Saudi installed cement capacity by region23
Saudi cement company production capacities23
New Saudi cement players24
Saudi cement data25
UAE confirmed capacity expansions26
GCC cement and clinker imports29

This information is taken from the MEED Insight report GCC Cement 2009: The drive for capacity. Gain exclusive insight on GCC market size and potential new opportunities, risk and key industry data from this report. To order your report today, download the order form (PDF) or email MEED Insight for more information, quoting reference CEM2.

About MEED Insight:

Thanks to its own projects tracker, MEED Projects, MEED Insight has access to unparalleled, up-to-date information on the region’s projects market. We can provide companies with:

  • Details of all major projects within a given market or sector, including their scope
  • Contacts for clients, contractors and suppliers
  • Information on key clients and their tendering processes
  • Information on how to register with clients and prequalify for projects
  • Forecasting of future projects

Data analysis
 
MEED Insight has access to a wealth of regional data ranging from broad macroeconomic statistics to sector-specific information. We can obtain and analyse data on a specific market or industry to help companies gain an insight on market size and potential

Off-the-shelf reports

MEED Insight also offers a series of off-the-shelf reports on a range of different sectors and industries. The information compiled for these reports comes from a variety of sources, including MEED magazine, MEED.com, MEED Events and MEED Projects, as well as primary and secondary research.

Our current off-the-shelf reports include:

  • GCC ICT Projects Outlook & Review
  • GCC Projects Forecast & Review 2010
  • Power & Water in the GCC 2010
  • Libya Power & Desalination
  • Middle East Steel 2009
  • Wastewater in the GCC
  • MENA Mining 2009
  • MENA Aluminium 2009
  • GCC District Cooling
  • GCC Economic Outlook

To find out how MEED Insight can help you gain critical business insight, please submit your details on our contact form:

Or

  • Email
  • Telephone: +971 (0) 4 367 1302

 

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications