Surging cost increases hit Middle East

The Middle East is again experiencing major hikes in material prices after costs stabilised last year, a new economic report claims. The most dramatic rise was a 45% increase in the cost of steel in Dubai experienced in August and the region as a whole seeing the cost of wood jump by 30%.

The bulletin from the Dubai Chamber of Commerce & Industry reports double digit growth in costs of major materials. It advises that producers in Dubai "are advised to adopt new technologies to increase the production" and adds that contractors should "co-operate and initiate long-term joint procurment projects with major suppliers".

The report's findigs include:

Steel

Consumption of steel in the region surged by 37% between 2005 and 2006. "The region is experiencing a serious deficit of 18.8m metric tonnes," the report says, leading to a 38% increase in prices for hot rolled plates in August 2006. The price increase was even sharper in Dubai, up 45% in August."

Aluminium

A world shortage of aluminium leading to a 17% increase in costs has fed through to the Middle East. Aluminium price in the region has inccrease by 24% in August. Dubai itself saw costs jump by 22%.

Cement

The region is facing a deficit of 6m tonnes and this led to an increase in the price of 10%. Dubai itself saw an 11% hike in costs.

Wood

High demand from China and a loss of wooded areas in Switzerland and Indonesia has led to global wood prices jumping by 9.8%. The Middle East is dependent on the import of wood, hence a surge in prices of 30% between 2005 and 2006. Dubai itself was slightly less affected than the region as a whole but prices were still 23% above 2005 figures.