While the construction sector may be slowing in certain regions of the Middle East, Saudi Arabia shows signs of promise as its cement output capacity looks set to increase by approximately 15.2% to 53 million t over this year. The 12 cement companies within the nation posted a 15% output increase to 37.8 million t in 2009, compared with 32.9 million t in 2008. By the end of 2009, Saudi Arabia’s total capacity reached 46 million t.
Sales up
Cement sales mirrored this trend over the same period – in 2009, the nation’s figures increased 22.9% to 36.7 million t compared with 29 million t the previous year. Exports dropped 57.1%, from 2.8 million t to 1.2 million t.
HSBC analysts estimate that Saudi Arabian cement sales will increase 22% over the course of the year. This growth will be particularly useful to companies with excess capacity, such as Saudi Cement and Tabuk Cement.
Will sales stay up?
A source at Global Investment House (GIH), Kuwait, echoed HSBC’s estimates, yet maintained skepticism with regard to profitability: ‘sales in Saudi can surely increase, but that doesn’t mean profitability is going to go up.’
Saudi Arabia’s government is planning to invest US$400 billion in infrastructure over the next five years, which should support local consumption.