Cement Sector Players in Oman Are Scaling up Their Production Capacity

Oman Daily Observer reported that cement sector players in Oman are scaling up their production capacity to meet the ever rising local demand and also from the countrys export markets like Yemen and some East African nations. Till recently, the Omani cement manufacturers were victims of cheap inflow of cement from UAE. In 2011, imports met 25% of cement demand in Oman, mainly from UAE where weak construction sector resulted in excess supply of cement. The UAE companies recently increased their cement prices. Cement prices for local players declined by 19% over last year and now stand at an average of OMR 25 per tonne. Now with the rising operational costs, the UAE players are no longer in a situation to offer cement at lower prices, which gives strong case of market share capitalization by local players. This is evident from the first quarter results of Oman Cement, a leading producer in Oman. Oman Cement said that the higher demand for cement during the current quarter is driven by ongoing infrastructure and construction activities in the local market. For the Q1 of 2012, the cement sales volume increased by 13.8% on YoY basis. The company achieved revenues of OMR 13.965 million an increase of 9% on YoY and 20% on QoQ. Gulf Baader Capital Market said that the revival of demand in the cement sector and improvement in the market share of the local players aided by higher volumes owing to higher infrastructure and construction activities have helped the company achieve this growth. Oman Cements clinker production during the quarter scaled up to 538, 000 tonnes against 277, 000 during the same period in 2011. The current capacity utilization stands at 90%. The output from new kiln stood at 321, 000 tonnes out of 538, 000 tonnes of clinker produced during the quarter. Gulf Baader said that the gains in the international oil prices have made the government to continue with its aggressive spending towards the infrastructure and construction activities which has spelled boon for the cement sector. With most of construction projects in Oman in implementation stage, the cement demand in the local market will remain at higher levels. This is clearly evident from Oman Cements improvement in its sales volume during the Q1. At the same time, Raysut Cements sales revenues in the Q1 fell by 8% to OMR 14.9 million compared with OMR 16.3 million during the corresponding period last year. Profit before tax dropped 35% to OMR 4.45 million during the quarter from OMR 6.81 million during the same period of last year. Mr Mohammed bin Alawi Ali Muqaibal chairman of Raysut Cement said that The decline in profit is attributable mainly to severe competitions faced both in domestic and the export markets impacting both volume and the price, which started from the later quarters of the previous year. Mr Ali Muqaibal said that overall, we believe Omani cement companies to witness unabated growth in forthcoming quarters aided by volume improvement. While Oman Cements plant is located in the fast growing Muscat region helping in meeting cement demand in northern side of Oman, Raysut Cement is located in the southern part of the country focusing more on the south. Due to close proximity to construction developments in this region, Oman Cement incurs lower transportation costs. The close proximity to Yemen, its major exporting market is also an additional advantage. Pioneer Cement, Raysuts UAE subsidiary, currently focuses on northern Oman, apart from the UAE market. Source: uaecement