Middle East cement prices hit a new high of $71/tonne

Region-wide construction boom leads to phenomenal surge in the price of cement as contractors and construction firms all over the GCC feel the pinch

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By  Rhys Jones Published  April 24, 2004

The price of cement in the Middle East has hit a new high of US $71/tonne. This rise is in stark contrast to the $52/tonne the region’s contractors were paying this time last year. This huge price rise has been attributed to increased demand from the region’s booming construction sector. Prices touched what was thought to be a peak of $63/tonne in February of this year but this new unexpected surge is likely to hit contractors hard. “There has been a rise in cement prices against this time last year and the region’s contractors are not feeling as comfortable as they once did. Prices are fluctuating rapidly,” said T Siddiqui, project manager, Petron Emirates Contracting Company. “Over the last one and half years, prices have surged approximately 35% and by-products like ready mix concrete have registered a further rise of 50-52% recently. Ready mix concrete is currently quoted at $53/m3 as against $35/m3 last year. The rise in ready mix concrete should have technically registered a growth of 15-20%. However, the price rise in ready mix indicates that manufacturers are cashing on the rise in cement prices and the current construction boom,” he added. Rising cement prices are also proving to be a risk for civil contractors because companies have to cover themselves for a period of almost 18 months. “Contractors have now decided to enter a clause in tenders for covering variations in cement prices by 5-10%, purely due to the upward trend in prices,” Siddiqui explained. The construction boom in the Middle East is also partly to blame for the region-wide fluctuation of cement prices with demand often out weighing supply. Prices of other materials such as steel and iron have also gone through the roof as a result. “The rise in cement prices is obviously due to the rise in demand from construction sector. Steel prices have also recorded as steep increase in prices from $23/tonne to $654/tonne quoting currently,” said Khalid Kilani, marketing manager, Juma Al Majid Company. “Industry players are keenly watching the prices as any increase in local price,which if not sustained by the buyers here will possibly open doors for cement imports at cheaper prices from other destinations. If the demand keeps increasing then we can expect a cement crisis in the next six months,” he added.

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