x Abu Dhabi, UAESunday 23 July 2017

New price cap on cement hits speculators

The Government has raised the price cap it had set two months ago on a bag of cement by about 19 per cent.

A cement truck in Abu Dhabi. The Ministry of Economy has raised the price cap on bags of cement.
A cement truck in Abu Dhabi. The Ministry of Economy has raised the price cap on bags of cement.

The Government yesterday raised the price cap it had set two months ago on a bag of cement by about 19 per cent, to boost production and prevent black market speculation in the material. The Ministry of Economy raised the price from Dh16 (US$4.30) a bag, to Dh18 for cement sold in cities, and to Dh19 per bag sold outside cities. By raising the ceiling price, the Government hopes to control increasing construction costs while assuring adequate supply to builders and prevent black market speculation.

"Through this initiative, the Ministry aims at preventing cement distributors and agents from raising prices unduly and also ensure timely delivery of cement at an appropriate price," said Mohammed Ahmed bin Abdulaziz al Shihhi, the undersecretary to Minister of Economy. Cement production is energy-intensive and rising costs of fuel had slowed production earlier this year as producers complained that the price cap made its manufacture unprofitable.

In a compromise in May, the ministry lowered the price cap on bags from Dh17 while raising it by 15 per cent on wholesale cement to Dh340 per tonne from Dh295 per tonne. Cement producers, in return, agreed to boost production to 250,000 bags, or 12,500 tonnes per day, from 150,000 bags, or 7,500 tonnes per day. The Government said at the time that it would assess those price caps in two months. @Email:mjalili@thenational.ae