Cement shortage threatens Kuwait construction

Kuwait is seeing a boom in its construction sector this year, with contracts worth $17.5bn already signed or on offer.

There are also a number of large-scale projects already underway and at the stage of moving from the drawing-board to the development stage, adding further momentum. However, raw material supplies, including cement, are in short supply and could cause delays and cost increases.  

In a new report released mid-July, the value of contracts in the pipeline for 2014 represents more than a 50% increase on $11.17bn worth of contracts awarded in 2013, according to business consultancy Ventures Middle East.

Project values have nearly doubled over the past two years as Kuwait pushes on with infrastructure and housing development, awarding contracts at a pace that outstrips the regional average.

Kuwait’s construction industry will also have to contend with soaring regional demand for cement and potential price increases. According to a report by industry publication Cement World, regional demand for this and other building materials will surge as a result of increased infrastructure spending.

There is also strong competition in the Gulf construction market. Saudi Arabia, for example, leads the way and has budgeted for up to $700bn worth of works over the next two decades. However, Kuwait is also expected to be a significant market for building materials, with its cement industry set to account for around 10% of the Gulf Cooperation Council (GCC) construction materials market.

On the macro-economic front, supply shortages could increase inflationary pressure – directly through rising materials costs and indirectly should blockages in the supply pipeline slow the delivery of projects, in particular in the residential component of the industry where the private sector is more active.

Source

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