Construction

UAE dumping sparking cement price war in Oman

UAE companies exporting excess cement into Oman is creating a price war and threatening local production. According to a report by Kuwait’s Global Investment House Oman’s cement firms experienced a 27.5% increase in operational costs between the last quarter of 2011 and Q1 2012 as they looked to compensate for cheaper imports. “Omani cement manufacturers […]

Oman's Raysat Cement is one of the country's leading producers

Oman's Raysat Cement is one of the country's leading producers

UAE companies exporting excess cement into Oman is creating a price war and threatening local production.

According to a report by Kuwait’s Global Investment House Oman’s cement firms experienced a 27.5% increase in operational costs between the last quarter of 2011 and Q1 2012 as they looked to compensate for cheaper imports.

“Omani cement manufacturers are currently facing a stressed situation due to the dumping of excess cement by UAE companies at cost in the Omani market, thus igniting price wars and pressuring Omani cement companies profits,” said the Kuwaiti analysts.

Sales revenue in Oman topped $100 million in the year, but this was offset by the soaring operational costs which reached a profit squeezing $65.5 million.

Conversely revenue for UAE companies totalled $258.1 million in the first quarter of 2012, a rise of 7.7%.

Price increases in the booming Saudi Arabian market helped gross margins increased 55.5% as net profits grew by 23.6% taking revenue to $365 million for the Kingdom’s cement producers. The Kingdom remains the GCC’s largest cement producer and it saw an increase in cement prices by 11.3%. Prices of $69.5/tonne, the highest average realisation price since 2003, were above the regional average of $66.7/tonne.

The World Cup 2022 and construction related to its 2030 plan are expected to put pressure on the Qatar market and cement prices increased to $70.1/tonne in the first quarter leading the government continue to cap cement prices at $68.7/tonne.

Kuwait is the most expensive place to buy cement at 75.8% despite a fall of 4.5% in the first quarter. Conversely while the UAE prices are down from $53.4/tonne in Q1 2011 to $53.1/tonne Q1 2012, a pick-up in activity around Abu Dhabi meant they rose sharply at the turn of the year by over 8%.

Global Investment House noted that the a rise in real estate and construction activity in the UAE as real estate prices bottom out are signs of “stabilisation and increased interest in the market”.

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