Long-Term Prospects for The UAE Cement Industry Are Bright

Long-term prospects for the UAE cement industry are bright due to growth in investment in infrastructure in the UAE, GCC and key foreign markets, the latest study by Dubai Chamber of Commerce and Industry finds. The UAE has the potential to become the major provider of cement to the Middle East and North Africa (MENA) region and beyond when taking into account the lucrative opportunities that exist. The study, which is based on the Business Monitor International (BMI) UAE Infrastructure report for Q1 2012, finds that given the historic importance of construction projects in the UAE and the GCC, the cement industry has acquired increased prominence as an important industry with growing demand. Furthermore, this is also an industry that can be expected to become more important in the future as demand for building materials increases in-line with plans for infrastructure spending in the UAE and the rest of the GCC region. Demand for cement depends on the growth of the global construction industry and growth in this industry is underpinned to some extent by growth of the global economy. Therefore, any weakness in global economic growth could translate into weakness in global cement demand. Other challenges are caused by competition by established players in foreign export markets. In the short to medium term, UAE companies could increase exports by finding gaps in demand and supply. While these gaps could emerge in any market, there could be more possibilities of such gaps developing in emerging markets in the MENA region, Africa and Central Asia. Over the longer term, UAE cement companies could develop contacts and establish a stronger brand presence in major export markets in developing countries to further increase their sales. Meanwhile, increased prices of raw materials and other inputs needed for cement production could create challenges for UAE cement companies. These challenges could be met by incorporating more efficient methods of production, more efficient financial and capital management, and a better and timelier service. This could not only help UAE cement and cement product manufacturers to absorb raw material price increases, but also in the longer run it will enable them to be more competitive and lower cost cement producers. In conclusion, the study finds that the need to build more real-estate and infrastructure in the UAE is expected to drive future demand for cement, while the growth in demand for construction materials from developing countries that presents lucrative export opportunities. This could especially be the case for emerging markets in Africa, Central Asia and the MENA region, in which supply and demand gaps may be created as long-term economic growth causes increased cement demand. The study recommends that UAE cement businesses develop contacts in these markets in order to fully realise this potential and grow their exports. Meanwhile, they ought to actively continue to enhance their competitive advantage in this industry by creating a brand presence in foreign markets, by differentiating their products, reducing production costs and improving efficiency. This, the study concludes, could help propel the UAE cement industry to be the major provider of cement to the MENA region and beyond. Source: uaecement