Release Date: 01-Mar-2013
The cement sector in Saudi Arabia benefits from the strong domestic market situation, buoyed by the government’s continued investment on infrastructure well supported by the favorable oil price movements. Other allied factors include a young demographic structure, increasing urbanization. The domestic producers enjoy a distinct competitive advantage, supported by the growing demand and the geographically distributed production setup.
The government support to the cement industry translates into a low cost of production whereby cement prices in Saudi Arabia are among the lowest in the world. The production and capacity scenario indicates further lower prices in the next few years making the industry more competitive. The latest techniques and technologies implemented in manufacturing will further make the industry more efficient and cheaper. It can be expected that the cement industry in Saudi Arabia will be able to support the huge and growing demands from the local sizeable construction projects and also be a leading exporter. It can be concluded that the construction and cement sector will continue to experience good times over an extended period of time, even if there are temporary blimps due to availability of inputs such as clinker.
The outlook for the Saudi cement industry to remains strong in futre. The government has issued licenses for new plants and additional capacity and also for mining of raw materials. Since cement is considered a strategic commodity, the government would do well to ensure that it is available for the country’s development needs as well as for the private requirements. However, preliminary indications regarding the number of licenses and volume of production, point to a situation of a large surplus in production not only in the country but also in the region. Even for the companies themselves they would need to undertake extensive studies before implementing the project plans.
For more information visit: “Saudi Arabia Cement Sector Analysis”