Oman’s cement manufacturers are likely to see higher production cost due to a possible increase in coal prices, brokerage firm Ubhar Capital said in its latest ‘GCC corporate earnings estimates’ report.
Coal prices have already increased to $360 per metric tonne in 2022 from $80 per metric tonne, the report said.
On the other hand, revenues will likely increase going forward, supported by the continued increase in the country’s construction activity and higher hydrocarbon prices.
Big-ticket projects in the pipeline reflect the government’s commitment to spending in the construction sector, which will positively impact cement demand.
Further, favourable demographics and rapid urbanisation will drive housing demand and increase cement sales.
As a result, most of the companies in Oman are increasing their production capacity to fulfill the impending increase in demand.
However, higher raw material prices will negatively affect margins and create pressure on the bottom line in the near term, the brokerage noted.
(Writing by P Deol; Editing by Anoop Menon)