Cap on cement being ignored

Cement prices are continuing to escalate despite the introduction of an official price cap a few months ago.
Cap on cement being ignored
By Monika Grzesik
Sat 08 Sep 2007 04:00 AM

Cement prices are continuing to escalate despite the introduction of an official price cap a few months ago.

The UAE Ministry of Economy fixed the price of cement at US $80 (AED295) per tonne in June but cement sellers are ignoring the cap and selling cement for up to 15% higher than that.

"There is a limit, which has basically been agreed upon between the players, but the effective price in the market is higher than that. So you hear prices up to $95 to $100 per tonne," said Richard Feraud, managing director, Quadra Trading."

Manufacturers admitted that they were selling cement for way over the official price. "Cement prices are currently between $81 and $87. It depends on which factory is selling this material. This is the price if you buy in bulk from the factory. If you buy it in bags you have to add around $5.5 extra," said Hafedh Ben Arab, marketing and sales manager, National Cement Factory.

According to Dr Imad Al Jamal, vice president, higher technical consultative committee, UAE Contractors Association, sellers are able to take advantage of the cap due to the free economy.

"Generally speaking they always tend to sell higher than what they agree. And it's a free economy; you cannot really control prices in this sense. They make an agreement, but since there is no forceful instrument or punishment under the law, they can take advantage."

He added that the smaller buyers were suffering the most.

"Small and medium-sized companies are the ones suffering because of their financial constraints, which mean they cannot really buy direct from the factory, so they buy from the middle men and these guys take advantage."

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