Cement capacity increase in the GCC
The Gulf Investment House is predicting that cement capacity in the countries that constitute the Gulf Corporation Council (GCC) will reach 120.7 million t by 2013, a rise of 13% on the 2011 figure. Cement demand is expected to reach 88 million tpa, up 6.6%. Capacity increase will be driven mainly by Saudi Arabia where it is expected to reach 58 million t, while demand is expected to be on a par with capacity increase, which is expected to rise by 8.3% during 2011 – 13. In the UAE, there will be an increase in the oversupply situation with capacity touching 43 million t by 2013. Oversupply is expected to continue until next year. This situation is likely to shrink on the back of huge spending plans announced by Saudi Arabia, Qatar and Kuwait.
Compilers of the report by the Gulf Investment House expect Saudi Arabia to remain in the forefront against a backdrop of huge spending plans followed by Oman and Qatar. In addition, the delay in the commissioning of some 4 million tpa of cement capacity in Saudi Arabia this year due to fuel shortages is likely to benefit a large number of existing players in the form of price support. The report mentions that, in Oman, despite the inflow of cheaper cement from UAE, the domestic cement companies will likely continue to benefit from the ongoing government projects, as its two cement producers are government backed. Excess capacity in the UAE could cast a shadow on all the GCC countries, as this would continue to initiate price wars and take away market share.
New projects in Iran and Iraq
In the year to March 2012, Iran was reported to have produced over 66.4 million t, an 8% rise on the previous year. Cement production capacity stands at 74 million t, but the Ministry of Industry, Mine and Trade has stated that with the implementation of new projects this figure will reach 110 million t by 2015.
In April it was announced that Pakistan’s Lucky Cement Company had decided to set up an 870 000 t greenfield cement grinding plant in Iraq under a joint venture. In November 2011, MerchantBridge announced that it had plans to triple cement production over the next two to three years at the Karbala cement plant, which is operated by Lafarge. The annual demand for cement in Iraq is estimated to be about 20 million t, and the country will be cement dependent for many years to come. The Ministry for Construction and Housing plans to spend US$60 billion on roads, bridges and housing from now until 2016. It is estimated that Iraq needs 2.5 million new homes over the next four to five years.
The impact of unrest
Holcim reports that, in Lebanon, the less stable political situation led to a decline in shipments of cement and ready mix concrete. Exports from the country to Syria and Iraq have fallen drastically with the continuing unrest in Syria. Cement consumption in Turkey is expected to grow by 4.5% this year after growing at 11% to 56.1 million t in 2011. The country is able to produce 70 million t. Even though it exports mostly to Russia, Argentina and Brazil, exports dropped by 4.5 million t in 2011, and could fall further this year.
Company reports and press releases, online news agencies, Reuters, the PCA, The Daily Star, The Jakarta Post, Business Standard and other newspapers, World Cement (April & June 2012 issues).
Written by Paul Maxwell-Cook.
This article is an abridged version of the full article, which appeared in the July 2012 issue of World Cement. Subscribers can view the full article by logging in.
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