“We are seeing a peak in prices now,” says Richard Feraud, managing director of Swiss-based cement trading company Quadra. “And there are some very strong drivers that will force prices up further during 2008.”
A tonne of bulk cement is currently costs between AED450-470, while the price for bagged cement stands at AED600 a tonne. “Last year the price for bulk cement reached a maximum of AED380 in the early 2007,” says Feraud. “And it was officially capped at AED295 in mid-June.”
Feraud estimates that around 30 per cent of cement in the UAE is imported, making domestic consumers vulnerable to price fluctuations in the global market. Local producers are also passing on the rising cost of importing clinker, the raw material used in cement production, to their customers.
“It is a producer's market,” says Feraud. “Demand may slow down over the summer months, but not to the extent that it will reverse the pressure on prices.”
At the end of March, Cairo announced a ban on cement exports until 1 October. Egypt’s cement producers have an export capacity of 8 million tonnes a year. Increased exports from Pakistan and India to the Middle East and East Africa are expected to replace this.