Saudi cement volumes have surged 9.8 percent year on year in the third quarter of 2022 , according to a statement by Riyadh-based leading financial services company Al Rajih Capital.
The increase in cement volumes in the Kingdom is mainly attributed to the drop in prices of construction materials as well as the consistent offtake of new residential loans which amounted to over SR10 billion ($2.66 billion) as of September of this year.
Between 2021 and 2023, residential mortgages are projected to grow at a compound annual growth rate of 18 percent. That said, new residential mortgages are projected to reach SR10 billion monthly in 2022 and around SR7 billion per month in 2023.
The cement sector in the Kingdom amounts for between 5 percent and 15 percent of construction expenditure.
Increasing inflation and the increase in interest rates respectively are expected to hinder some of the short-term gains in the sector. Nonetheless, the long-term outlook on the industry remains positive.
Cement inventory levels stood at 10.7 million tons in 2019, 8.7 million tons in 2020, and 7.4 million tons in 2021. As demand continues to increase, inventory figures are projected to continue to drop as well.
Meanwhile, Saudi-based building material firm Yamama Cement is set to spend as much as SR830 million in efforts to transfer its old line to a new factory and raise its capacity by 50 percent. The new facility – which is expected to start commercial production in Nov. 2022 – will allow the firm to charge depreciation, thus boosting its sales and support cement prices in the process.
Saudi Arabia’s local cement sales hit 1.45 million tons during Q3 of 2022, up from 1.43 million tons in the corresponding period a year earlier, according to Southern Province Cement Co.’s CEO Aqeel Kadasah.
The financial results in the three months leading to October indicate the cement sector’s recovery in the Kingdom Kadasah said.
Given the pipeline of projects in the country, local demand is set to increase, thus improving cement’s selling price, he revealed.
Cement prices are anticipated to further improve to reach an average of SR180 per ton in 2023.
Last month, the Kingdom issued a total of 281 licenses to export iron and cement since a ban on the exportation of the commodities was lifted six years ago, the Ministry of Commerce told Al Eqtisadiah.
The Saudi government imposed a ban on cement exports in 2008 to push prices down and accommodate demand from large government-funded infrastructure projects.