06 April 2009
Prices of ready-mix concrete have fallen by almost Dh100, a drop of 25 per cent since January 2009, mainly due to a decline in cement prices and a massive fall in demand.
In January, the average cost of ready-mix concrete was around Dh400 to Dh480 per cubic metre based on the grade. Currently it ranges around Dh300 to Dh380 per cubic metre. Officials say that the prices could drop further during this week, following a reduction in the prices of cement.
Cement factories meanwhile said they are yet to implement the Ministry of Economy's recommendation, to cap the cement prices at Dh280. Currently a tonne of bulk cement continues to be sold for around Dh330 to Dh350 and a bag for Dh16.
The new framework was expected to come into effect starting April 1.
Rauf Khan, Sales Manager at Al Azzani Ready Mix yesterday told Emirates Business that they continued to buy cement from factories at around Dh335 per tonne.
"Our prices too have dropped. The grade of cement and its type of mixing determines its price. On an average we used to sell at Dh400 per cubic metre in January. Today, the prices have dropped to about Dh300 per cubic metre," said Khan.
However, companies said they were expecting a possible drop in cement prices very soon. "We have still not been informed about how much the prices would drop, but there could be an announcement soon," said Khan.
Another official of the Readymix Gulf said their prices too had dropped by Dh100 compared to the last quarter of 2008. "We used to sell certain types of concrete at around Dh480 per cubic metre. Now it has gone down to Dh380 to Dh400," he said. According to him, the main reason for the fall has been the drop in demand and the reduction in the cost of raw materials and diesel.
"We all know that several projects have been put on hold and there is a drop in demand and most readymix companies have cut production. We have cut production by around 35 per cent from over 3,000 cubic metres per day to 2,000 cubic metres," said the official.
Besides, many readymix companies, which worked for 24-hour daily, have reduced their timings by almost six hours and are losing around 25 per cent of the revenue. The situation looks grim especially after the completion of ongoing projects. "Right now we have orders for projects, which we signed up last year. There are not many projects in the pipeline and that is causing concern," said another official.
Meanwhile, a senior executive from a UAE-based cement company said no decision has been reached despite a meeting with the MoE last week. "We also had an internal meeting within our company. Cement is continuing to be sold at the old prices as of today," said the official.
"The drop in concrete prices have been much sharper compared to cement prices. Cement prices eased to current levels from around Dh360 per tonne during the last quarter of 2008. In comparison, our prices have dropped by almost 25 per cent," he added.
Prices of ready-mix concrete have fallen by almost Dh100, a drop of 25 per cent since January 2009, mainly due to a decline in cement prices and a massive fall in demand.
In January, the average cost of ready-mix concrete was around Dh400 to Dh480 per cubic metre based on the grade. Currently it ranges around Dh300 to Dh380 per cubic metre. Officials say that the prices could drop further during this week, following a reduction in the prices of cement.
Cement factories meanwhile said they are yet to implement the Ministry of Economy's recommendation, to cap the cement prices at Dh280. Currently a tonne of bulk cement continues to be sold for around Dh330 to Dh350 and a bag for Dh16.
The new framework was expected to come into effect starting April 1.
Rauf Khan, Sales Manager at Al Azzani Ready Mix yesterday told Emirates Business that they continued to buy cement from factories at around Dh335 per tonne.
"Our prices too have dropped. The grade of cement and its type of mixing determines its price. On an average we used to sell at Dh400 per cubic metre in January. Today, the prices have dropped to about Dh300 per cubic metre," said Khan.
However, companies said they were expecting a possible drop in cement prices very soon. "We have still not been informed about how much the prices would drop, but there could be an announcement soon," said Khan.
Another official of the Readymix Gulf said their prices too had dropped by Dh100 compared to the last quarter of 2008. "We used to sell certain types of concrete at around Dh480 per cubic metre. Now it has gone down to Dh380 to Dh400," he said. According to him, the main reason for the fall has been the drop in demand and the reduction in the cost of raw materials and diesel.
"We all know that several projects have been put on hold and there is a drop in demand and most readymix companies have cut production. We have cut production by around 35 per cent from over 3,000 cubic metres per day to 2,000 cubic metres," said the official.
Besides, many readymix companies, which worked for 24-hour daily, have reduced their timings by almost six hours and are losing around 25 per cent of the revenue. The situation looks grim especially after the completion of ongoing projects. "Right now we have orders for projects, which we signed up last year. There are not many projects in the pipeline and that is causing concern," said another official.
Meanwhile, a senior executive from a UAE-based cement company said no decision has been reached despite a meeting with the MoE last week. "We also had an internal meeting within our company. Cement is continuing to be sold at the old prices as of today," said the official.
"The drop in concrete prices have been much sharper compared to cement prices. Cement prices eased to current levels from around Dh360 per tonne during the last quarter of 2008. In comparison, our prices have dropped by almost 25 per cent," he added.
By Joseph George
© Emirates Business 24/7 2009
