Expo 2020 and World Cup seen to spur GCC cement demand growth

Global analysts pointed out that positive market sentiment, and increasing tourism and trade led to the recovery of the UAE’s real estate sector in 2013, with resumption of several stalled projects.

By Issac John

Published: Wed 16 Oct 2013, 11:06 AM

Last updated: Tue 7 Apr 2015, 8:21 PM

DUBAI — Cement demand in the GCC is projected to climb six to seven per cent in 2014 from four to five per cent in 2013 with several high-ticket projects in the pipeline, said Global Investment House, or GIH.

The GCC’s cement sector, which witnessed a broad turnaround in 2012 mainly on increasing construction activity across the region, is expected to maintain the growth momentum, GIH analysts said in a review of the region’s cement industry.

“We expect the uptrend in demand to continue at least for the next four to five years, with further sizeable additions for high-ticket projects including the 2022 Fifa World Cup in Qatar and World Expo 2020, which is expected to be hosted by Dubai,” the report said.

Currently, Saudi Arabia is leading the region in terms of housing and infrastructure. The kingdom has come up with a SR250 billion housing construction programme and introduced the Mortgage Law, which are expected to boost demand for cement. The UAE, Qatar and Oman are following suit.

Global analysts pointed out that positive market sentiment, and increasing tourism and trade led to the recovery of the UAE’s real estate sector in 2013, with resumption of several stalled projects. Qatar has planned construction projects worth about $140 billion for the next five years to prepare for the World Cup. “Majority capacity additions in place; few more in the pipeline.”

According to the report, as of 2012, cement grinding capacity in GCC totalled 117mtpa, while clinker capacity was around 88mtpa. Surplus at the clinker level is quite low, while that at the grinding level is in the range of 25-30mn tonnes.

“With an expected increase in demand for cement, we believe surplus at the clinker level will completely disappear, while that at the cement level will decline to five to 10 million tonnes by 2015-16. The drop would be aided by very few cement capacity expansions that would increase supply from 117mtpa in 2012 to 126mtpa by 2015,” the report said.

According to Kuwait’s Gulf Investment House, the combined net profits of the GCC’s listed cement companies grew to $585.3 million during the first three months of the year. This is a 16.9 per cent increase on the $500.9 million achieved last year. Total sales increased by 13.8 per cent during the quarter to $1.4 billion.

The report said that the highest levels of sales increase were in Qatar, however, where revenues grew by 10 per cent.”Oman stood second and reported a growth of six per cent, while Saudi Arabia reported an increase of 3.2 per cent,” GIH’s report said.