By Santhosh V Perumal/Business Reporter

Qatar is expected to face a “serious shortage” of cement in the near future as no major capacity additions are in the pipeline in order to meet the rising demand of 10mn tonnes per annum (mtpa), according to Global Investment House.
“Given the rapid rise in cement demand, Qatari companies are still not ready to gear up capacity to meet the same. With no other major capacity addition announcements, we feel Qatar will face a major cement shortage scenario going forward,” Global said in its latest report.
Observing that strong infrastructure spending by the Qatar government continues to boost demand for the cement sector, the report said with such huge project pipelines, demand for cement is expected to shoot.
The average cement demand in Qatar during 2013-15 period is expected to stand at around 5.5mtpa, higher than the government estimate of 3.5-4mtpa. With many big ticket projects coming online thereafter, cement demand is slated to pick up further to 10mtpa, it said.
Total expenditure during 2013-14 has been set at $57.8bn, up 18% from that in the previous year. Furthermore, the recent BMI estimates show that Qatar is expected to spend $140-150bn on infrastructure over the next decade.
Out of this, around $40bn is earmarked for railways, $15.5bn for airports, $20bn for roads and around $4bn for stadia. Qatar’s construction activity is primarily driven by FIFA World Cup 2022 and its Vision 2030 plan.
Global said there are two major road projects led by Public Works Authority Ashghal: a local roads and drainage programme for upgrading Doha’s road network worth $14.6bn and is expected to be completed in 2016; the other one includes highways in Doha, Lusail and Dukhan worth $14.6bn to be completed in 2016.
Qatar Rail’s construction cost is pegged at $35bn with initial phases to be completed by 2020.
A Msheireb real estate regeneration project in the centre of Doha worth $5.5bn to house 27,000 residents is slated for completion by 2016. The project includes commercial, retail, cultural and entertainment areas.
Development of schools and healthcare are also high on the priority list of the government, receiving 28% and 18% respectively of the total capital
spending in 2013-14.
Qatar National Cement Co (QNCC) witnessed inflow of new customers, indicating a sign of heating up of cement market in preparation of the World
Cup 2022.
“QNCC is in the process of boosting its production capacity as it has hired TPF, Basse Sambre of Belgium to study the prospects expanding the design capacity 5,000 or 7,500 tonnes per day of clinker,”
Global said.
Although no timeline has been given as to when it will start and begin commissioning but once finalised it would take typically 24-30months for the new line to be operational, it said.
Qatari Investors Group last week unveiled its QR700mn expansion for its cement subsidiary. It entered into agreement with Danish FLSmidth and the Chinese CNBM International to expand Al Khaliji Cement’s second line to double the clinker production capacity to 12,000 tonnes per day and expand the cement production to 14,000 tonnes per day.
Highlighting that cement prices remained mostly constant since the last couple of years; Global said in the first quarter of this year, average cement prices stood at $70.1 per tonne, which was equal to the average in 2011 and 2012 mainly due to
government controls.
“Due to increase in demand, price may move upward in near term. However, Qatari companies have witnessed an improvement in their margins. The improvement is ascribed to a shift to more efficient and operative environment,” it said.
Finding that Qatari companies continue to work towards strengthening their balance sheets by reducing debt levels; Global said overall debt level of the sector fell 6% to $291.5mn in the first quarter of this year, mainly led by a 75% decline in debt of QNCC.