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04 October 2023

Ministry of Economy studies cost of cement production

MoE will decide on cutting prices if it finds them to be higher than the production and operating costs. (EB FILE)

By Abdel Hai Mohamad

Studies into the cost of producing cement are being carried out by the Ministry of Economy (MoE), which says it will order factories to cut their prices if it finds they are charging too much.

"The MoE has begun intensive studies to determine the cost of cement production at factories in the country," Dr Hashim Al Nuaimi, Director of the Consumer Protection Department, told Emirates Business.

"The ministry will make a decision about reducing prices in light of the studies if we find that the price of cement is higher than the production and operating costs. The prices were previously set at Dh16 for a 50kg bag from a factory, Dh18 for the same bag from distribution outlets and Dh20 if the bag is transferred from one emirate to another. The studies come at a time when demand for cement has fallen and the supply has increased."

"The MoE will hold meetings with the Cement Producers Group in the second quarter of the year to discuss the results of the studies. We have not yet made a definite decision about a reduction – talk of a cut of 10 to 15 per cent is premature."

However, producers said supply and demand over the coming period – and not any decision by the ministry – would determine the price.

Ahmed Al Amash, General Manager of the Gulf Cement Company, said: "If the MoE determined the price of cement and the market saw a big fall in demand, the sale price might be lower than the one determined by the MoE. Cement factories are currently in a very bad situation as prices have dropped locally by a remarkable amount. It would be better if the MoE supported the factories rather than reducing prices further. Production costs are increasing while the demand for cement in the country is falling."

Hamad Abdulrahman Al Rahmani, CEO of Al Rahmani General Trading Company in Dubai and the Northern Emirates, complained that some factories were cutting production to try to force up the price.

"Factories in the Northern Emirates provide only half our needs and have reduced production," he said. "Unfortunately most dealers and distribution outlets often do not adhere to the MoE's decisions and sell cement at higher prices."