Ministry signs agreement to stabilise cement prices

Dubai: Around 40 per cent of inflation problems in the UAE stem from international factors, according to Sultan Bin Saeed Al Mansouri, Minister of Economy.

Al Mansouri said 60 per cent of inflation problems comes from local causes and 40 per cent from international sources.

"In the UAE, 60 per cent of the reasons for inflation is due to local attributors and 40 per cent is from international contributors," said Al Mansouri.

The minister said rent is the number one domestic cause but inflation is affecting all sectors.

"Oil prices have reflected on the energy prices in the UAE, with fuel and so on. We will be able to minimise the percentage of inflation in the UAE but it's a world phenomenon," he added.

The Ministry of Economy yesterday signed a memorandum of understanding (MoU) with the Cement Producers Group (CPG) intended to improve the availability of cement and to give it a reasonable price.

The MoU states that the CPG will increase production capacity of 50 kilogram bags of cement from 150,000 sacks to a minimum of 250,000 sacks per day. The prices, currently at Dh17 for a 50-kilogram bag of cement, will now be reduced to Dh16.

CPG also agreed to fix the price of one unpacked tonne of cement to Dh340 and to update the MoE with production information every three months.

Al Mansouri said he now expects an increase in cement production due to the many large projects being carried out by cement companies and factories, leading to market stability and price reduction.

"The new prices will serve a lot of small contractors because that's where the majority of problems are right now," he said.

"The market in the world is changing but we need to make sure the market is stable for the year 2008.

"We've seen cooperation in the food sector with co-ops and Carrefour over food issues. Now we see it with cement," said Al Mansouri.

According to a report by Middle East Economic Digest (Meed) there are currently around six cement producers listed on the UAE financial markets.