Middle Eastern cement demand is expected to fall in 2017 as the region continued to struggle with a fall in oil revenues, according to a new report from IA Cement, while African consumption will rise – but much slower than in previous years.
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Middle East faces challenges
In 2017 cement demand is projected to decline 0.5 – 1% in the Middle East. The region is struggling to adjust to the new level of oil prices. OPEC production cuts are expected to push prices up in 2017, but not back to the US$75 – 80 levels of the past.
In response, governments are reducing spending and raising taxes, sometimes quite dramatically. Private demand is being held back by low business confidence and falling real estate prices. In some cases, Governments withheld payments to contractors thereby freezing the entire construction value chain.
The downturn in Saudi Arabia is gathering momentum. Iran faces a difficult year, with a moribund real estate market, a new US administration to deal with and its own elections. Turkish cement demand remains solid, helped by public works and a favourable base effect where July/August 2016 were impacted by the failed coup.
IA Cement expects cement consumption in Africa to increase by 1 – 1.5% in 2017, much slower than in previous years.
East Africa is enjoying a wave of public spending, while the region has escaped the commodity-related turmoil. Demand prospects remain uncertain in key oil-producing nations such as Algeria, Nigeria and Angola. Egypt’s recent flotation of its currency and IMF bailout may help to stabilise its economy, which has been hurt by dollar shortages and a large budget deficit. Elections in Kenya and political turmoil in the DRC add to an uncertain atmosphere.
Above all, producers are struggling to deal with the surge in new capacity, which has led to cement prices falling US$50 across much of sub-Saharan Africa over the last three years.
Editor’s Note – Extract from “Recovery Underway” (World Cement: January 2017). Information on IA Cement’s full global outlook for the cement industry in 2017 is available here or by emailing: publications@iacement.com.
Read the article online at: https://www.worldcement.com/africa-middle-east/18012017/cement-demand-in-africa-and-the-middle-east/
