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Saudi Arabia’s cement industry on the road to recovery

World Cement,

Saudi Arabia’s cement sector is facing the road to recovery as a result of high public spending and improved economic conditions. Al-Jouf Cement’s 180 000 t plant was recently brought onstream, contributing to the nation’s total production growth, which has increased by 13.9% to 32.2 million t. 96.2% of this was represented by the domestic market, with foreign markets accounting for 3.5%.

The cement industry in Saudi Arabia has struggled of late, with demand slowing and prices weakening. Net profits of the eight listed companies have also dropped 16% y-o-y. NCB, the largest bank in Saudi Arabia, said, “thus, the overall net profit of the eight listed companies dropped by 2.6% to SR 2821 million in the first nine months of 2010 over SR 2897 million in the same period of last year. Investors responded in a subdued fashion to listed cement companies, causing a 2% drop in their stock prices so far this year. As the construction sector recovers, the demand for cement will start to pick up in a paced fashion.”

Saudi Arabia’s 2010 budget aims to maintain an expansionary fiscal policy, which would support the demand for cement. Plans are also in place to outlay US$ 400 billion on infrastructure over the next five years. Furthermore, a combination of licences for new projects and expansions of existing plants is forecast to push the nation’s production capacity to 54 million t by the end of this year.

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