JEDDAH, 21 November 2004 — With huge construction projects in infrastructure sector — including residential, retail and commercial segments — currently under way in Saudi Arabia, Bahrain, Oman, Qatar and the UAE, the Gulf cement industry is projected to see sustained high demand growth in the near-term.
Planned big ticket projects in the region are likely to keep up the demand momentum going forward, according to a report by Kuwait-based Global Investment House (GIH).
“Various countries are preparing to meet the anticipated demand boom by going in for expansion in clinker and cement capacities. Imports are being encouraged and exports banned in some countries to tide over the current cement shortage,” the report said.
The GIH report projected an annual cement demand growth of about 9.5 percent in the GCC countries from 2003 to 2006.
Cement consumption in GCC was about 114.7 million metric tons at the end of 2003, growing at a rate of 7.3 percent from 107.0 million metric tons in 2002 in the Middle East and North Africa (MENA) region, the report said. “The ongoing boom in the construction sector in the GCC countries and elsewhere in the MENA region is expected to sustain high cement consumption levels in the coming years,” the report added.
Per capita cement consumption in the region worked out to 362.7kg in 2002, up 4.7 percent over the previous year.
GIH report shows a projected annual cement demand growth of about seven percent in the MENA countries from 2003 to 2006.
A consumption shift is expected toward the GCC region among the MENA countries in the same timescale. As against a share of consumption of 33.4 percent in 2003, the GCC countries are projected to see a higher share of 35.8 percent by the end of 2006.
Most of these countries have already announced or are in the middle of actually implementing big-ticket infrastructure and real estate projects, many of which could stretch well into 2006 or 2007.
The GCC countries’ per capita consumption and growth in consumption are the highest in the MENA region, with big-ticket construction projects having been undertaken in almost all those countries in recent years.
The clinker production in the GCC region was estimated at 35.1mt at the end of 2003, up 19.7 percent from that in the previous year. This was against an estimated nominal capacity of 32.0mt at the end of the year, indicating a capacity utilization of 109.6 percent, the highest in the entire MENA region, the report added.
The GCC clinker production was about 34.7 percent of that of the MENA region, up from 30.8 percent the previous year.
The cement production in the region was estimated at 40.3mt at the end of the year, up 11.3 percent over the previous year. The estimated cement capacity utilization for the year was higher at 100.8 percent. The clinker shortage in the region was about 6.9mt during the year.
The GCC cement production was about 35.3 percent of that of the MENA region, up from 33.2 percent the previous year.
The consumption of cement in the region was estimated at 38.3mt in 2003, up 27.2 percent over that in the previous year. At this level of consumption, the per capita cement consumption in the region was about 1051.0kgs, the highest in the region, up 15.8 percent over the previous year. The GCC cement consumption was about 33.4 percent of that of the MENA region, up from 28.1 percent the previous year, showing an uptrend.