GCC cement sector capacity to hit 120Mt by 2013

Cement capacity in the GCC cement sector is expected to hit 120.7Mt in 2013, according to a Global Investment House (GIH) report with rising demand in Saudi Arabia, Qatar and Kuwait expected to take pressure off the oversupply situation.

Saudi Arabia is driving the capacity gains as the country continues to outperform the region. Volumes are expected to reach 58Mta in 2013 and demand is expected to be on a par as new projects across all sectors emerge due to increased government spending. A new budge plan has just been announced with expenditure of SAR690bn (US$184bn) planned for 2012.

The UAE is expected to continue struggling with an oversupply situation, with capacity reaching 43Mta by 2013 against demand in the range of 18-20Mta, GIH said in its report. Cement demand in the UAE has almost halved in just three years, falling by 8.8Mt between 2008 and 2011, representing a peak-to-trough fall of 42 per cent, according to CemNet research. Capacity utilisation rates have slumped to around 40 per cent, pushing producers to close down less efficient kiln lines with price wars ensuing.

According to the GIH report, cement demand is forecast to reach 88Mt, up 6.6 per cent from 82.5Mt in 2011. However, GIH notes that the over-supply situation in the GCC is likely to shrink on the back of huge spending plans announced by Saudi Arabia, Qatar and Kuwait.