October 07, 2008

UAE construction sector facing RMC crisis

Emirates Business reported that the real estate boom in the UAE is set to hit a major roadblock that could seriously affect the completion of projects across the Emirates. As per report, the problem lies with companies that supply ready mix concrete.

Representatives of these suppliers told Emirates Business that they are struggling with a huge backlog of orders due to a massive shortage in the supply of cement and that they have issued their clients notices that they are not in a position to supply more than 45% of the ready mix orders.

As per report, some RMC companies have even ceased production.

In order to cope with the huge demand for concrete, some ready-mix companies are looking to cement imports as a viable option, regardless of the high cost. A RMC company said “We are ready to import cement at whatever cost because it is a necessity. If the situation persists, I think this will be the only available option to us.”

The shortage has been triggered by the high cost and lack of cement, according to ready mix producers. In the past week itself, cement prices in the country have gone up by 25% with factories arguing that it is a direct result of increasing oil prices in the region having a knock on effect.

Contractors are worried that the shortage might cause another hike in cement prices in the country. The shortage of cement and the subsequent lack of concrete also risks causing a delay in the delivery of some projects if the situation persists.