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Truce in Lebanon makes cement shares attractive

By Robert Ditcham, Staff Reporter - Gulf News

Dubai: Shares in UAE cement companies reacted strongly to the Lebanese ceasefire this week as prospects increase of infrastructure and property reconstruction in the war-torn country.

Although UAE companies such as Union Cement, Gulf Cement and Ras Al Kaimah Cement focus mainly on the domestic market, experts say resources pulled from other parts of the Gulf will create gaps in demand which could be filled by local companies.

The possible trend saw a recent rally on the Abu Dhabi market, with cement companies alone accounting for Dh31 million worth of transactions.

It follows soaring cement prices earlier this year, followed by fears of over-supply and a price crash, encouraging suppliers to offload stock.

Mike Richardson, general manager of Ras Al Khaimah Cement, said any benefit to the company from a possible re-construction of Lebanon would be "extremely indirect".

"I do not envisage our cement going to Lebanon. We supply to the UAE market and to Iraq on a small scale and we are already at full production," he said.

But Richardson said increased supply pulled from Saudi Arabia and Jordan, Lebanon's traditional sources of cement, could create a supply deficit in areas closer to home, such as Kuwait.

Officials at Ras Al Khai-mah Company for White Cement and Construction Materials also said logistical barriers prevented them from exporting their products to Lebanon, while countries including Iraq provide better opportunities.

Khalid Maniar, managing partner of Dubai-based chartered certified accountants Agn Mak, said stock market gains for cement companies were more a result of market hearsay and speculation rather than a direct link between UAE companies providing construction materials for the Lebanese market.

"There is a lot of speculation among analysts that companies such as cement manufacturers will have the potential to see increased demand and profit in the future, even though in reality this may not always be possible," he said.

Maniar argued instead that local companies could benefit from Lebanon's future re-building by supplying skilled construction labour needed to work on complex infrastructure projects.


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