New cement price cap at US $92.5 per tonne

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The move by the Ministry of Economy to fix the price of cement will reduce the price per 50kg sack from $4.62 to $4.34.

A tonne of cement in the UAE has been fixed at a cost of US $92.5 (AED340) by the Ministry of Economy.

This follows a recent report in Construction Week, which predicted the ministry would change the capped price on cement from the redundant $80 per tonne to a more workable price.

Last week, the Cement Producers Group (CPG) and the Ministry of Economy signed a Memorandum of Understanding (MoU) that would increase daily production of 50kg cement sacks from 150,000 to 250,000. The MoU will also reduce the price from $4.62 to $4.34 per sack.

The agreement also allows consumers and contractors to buy cement sacks from the producer directly without any restrictions.

HE Sultan bin Saeed Al Mansouri, UAE minister of economy, said the MoU aims to reduce inflation, control rising prices and combat attempts by monopolies to cash in on the UAE construction boom.

"Inflation is an international problem, especially for countries witnessing high growing rates, however, our country, through the Ministry of Economy, shall prevent exploitative activities which threaten market stability.

In March, HH Sheikh Mohammed bin Rashid Al Maktoum, UAE vice president and prime minister and ruler of Dubai, exempted cement and steel imports from custom fees in order to combat a supply shortage and rising prices.

Ahmed Saif Belhasa, chairman of the UAE Contractors Association, said: "The signing of the agreement is very timely since besides controlling the price of cement, it also positively influences different market trends so that no loss will be incurred by cement plants or contractors.

But some ready mix companies feel that the cap won't make much of a difference. "There is a shortage in the market, even after production has been increased and everyone is running at full capacity," said Chris Lobel, general manager, Conmix.

The cap will do nothing; it will only raise the benchmark and it will just mean that cement is being bought at a higher price. It also means that the black market price will go up.

"There may be a short relief, but it will only be short-lived."

RELATED LINKS: What price a bag of cement?

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