Cement production in the GCC will exceed demand
Afrihcan Manager

Cement production in the GCC will exceed demand by almost 15 per cent in 2009 with largest additions scheduled in Saudi Arabia and the UAE, according to a research report on the GCC cement sector by Credit Suisse.

The researchers estimate that the construction markets in Saudi Arabia, Qatar and Abu Dhabi would remain strong, giving an impetus to demand for consumption material, whereas Dubai and Kuwait represent less attractive markets.

"We expect a wave of excess supply across the region, with the largest additions in Saudi Arabia and the UAE. We expect demand to slow as a result of projects put on hold or cancelled, thus exacerbating the oversupply situation. Regional pockets of cement manufacture might be able to withstand some of the resulting pressure on prices and lower operating rates," said the report.

Supply of cement is expected to grow by about 20 per cent in 2009 whereas demand growth would be limited to just five per cent. Given these circumstances, the report says environment, location and cost structure are key to demand. "Geographically, from a cement industry perspective, we prefer Saudi Arabia (Riyadh region), Qatar and Oman to have the most advantageous cost structure," it said.

The cement capacity evolution, the report said, points to Saudi Arabia with an additional capacity of 39 per cent from 2008 to end-2010, the UAE with an addition of 27 per cent and Qatar with an addition of 114 per cent undergoing major capacity expansion in the next two years

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