Why has the cap on cement prices in the UAE not worked?
Capping prices by the goodwill of local operators has not worked because market forces are driving prices up. Also, developers are willing to pay extra premium on cement because otherwise they will pay penalties on the projects they are not delivering on time. All the drivers are there. The intention of capping prices was to avoid over-heating, but the natural trends in the cement market have pushed prices up. It seems like some local players have been avoiding the cap by getting two or three trading companies to exclusively market their cement. So they sign exclusive contracts with developers selling cement at an above cap rate. What could be done to change the situation? Cement could be capped at a higher level. But this too may be wishful thinking because market forces are stronger than government interference here. It’s an open economy and although it could be possible to protect an industry, all the prices of raw materials are rising over here. Some developers and contractors have
