DOHA: Driven by heavy government infrastructure spending, Qatar’s domestic cement demand is projected to grow double from the current levels within next three years.
The Dubai-based financial services firm Arqaam Capital in its report on Qatar’s cement sector released yesterday noted the country’s cement demand dynamics is heavily driven by government infrastructure spend. Qatar’s domestic construction expenditure, which equated to 6.5 percent of GDP in 2013, will touch 6.9 percent of real GDP in 2014.
Citing various official data, the report said Qatar is expected to open up to QR182bn construction projects this year, up 15 percent compared to the year 2013. The move follows the state’s plan to invest QR757bn on infrastructure developments in 2013-2018, largely linked to the 2022 World Cup event.
Given that current projects under execution are worth $70bn, and reflect an average churn rate of 3-4 years, the expenditure implies a doubling in cement demand within the next three years. Accordingly, and factoring in execution delays, Arqaam expects cement demand growth to accelerate, delivering 9.4mtpa in consumption by FY 17.
“We expect production capacity and demand levels to reach equilibrium by FY18. Our forecasts are on the conservative side as Qatar’s Ministry of development and planning’s most recently published survey suggests demand for limestone is set to increase by 131 percent in 2014 and 127 percent in 2015, with demand for washed sand growing by 108 percent in 2014 and 106 percent in 2015,” it said.
“QNCD remains Qatar’s largest cement producer with a production capacity of 4.4mtpa of cement (62 percent of market). We believe that the market’s second largest player, Al Khalij Cement (capacity of 1.8mtpa clinker, 2.7mta cement), has captured market share from QNCD in FY13.
As per the latest BMI data (Q1 14), cement is the major source of cost pressure on the construction and building materials sectors in Qatar. The Peninsula
