CW RESEARCH: KUWAITI CEMENT OUTLOOK POSITIVE ON PUBLIC INVESTMENT AND PRIVATE HOMEOWNERSHIP

Cement demand in Kuwait expanded at a buoyant CAGR of 18% between 2010 and 2016

The increase in consumption was sustained by a strong pipeline of governmental infrastructure projects, founded through capital sourced from oil revenue. Conversely, the international oil price crisis took its toll on the Kuwaiti government's public investments, leading to a 1.2% decrease in cement consumption in 2016.

ÔÇ£Despite consumption almost tripling from 2010 to 2016, domestic suppliers were not able to keep up with the growth. Domestic supply-demand is, thus, imbalanced, making Kuwait reliant on importsÔÇØ, noted Tea Vukicevic, CW Research's Associate Analyst.

The combination of lack of natural resources and rapid growing demand has created a market reliant on cement importers. With only two domestic manufacturers, Kuwait Cement Company and ACICO, a significant share of cement in the market is imported in bags, either directly or as clinker for grinding through dedicated cement import terminals.

Public projects and affordable residential housing sustain positive forecast

The conservative optimism currently surrounding the future international crude oil prices in OPEC countries prevents CW Research from forecasting a cement demand increase above two percent, from 2017 to 2021.

The infrastructure sector outlook is moderately positive over the next few years, driven by the Kuwaiti government's numerous planned projects and increasing homeownership affordability. Nonetheless, threats subsist, as Kuwait's undiversified GDP structure poses challenges to the capital necessary to invest in infrastructure expansion.

As Tea Vukicevic stresses, ÔÇ£the slim forecast consumption growth is encouraging enough for cement manufacturers to add new capacity on the market. As a result CW Research projects that Kuwait will become less dependent on foreign-sourced cementÔÇØ.

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