Cement shortage triggers crisis in Makkah


Published — Wednesday 19 December 2012

Last update 19 December 2012 4:05 am

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The depleting cement stock has triggered a crisis in Makkah, as the price of one cement bag reached SR 20 in the black market recently.
It is feared that more than 300 construction projects will have to be suspended due to the cement shortage. Whilst other contractors are buying cement at higher prices in the black market because they fear heavy fines will be imposed on them if their projects are not completed at the agreed-upon time.
Chairman of the Contractors Committee at the Makkah Chamber of Commerce and Industry (MCCI) Abdullah Al-Saeedi said the MCCI planned to raise the issue to the Council of Saudi Chambers of Commerce and Industry to find an immediate solution.
“The crisis began to unfold 10 days ago when distributors failed to meet the rising demand for cement,” Al-Saeedi said, adding that the price may go above SR 20 per bag.
Another source said the shortage would be more acute next year, as the expansion work of some cement factories is likely to last not less than 18 months and establishing new factories will take between 24 to 30 months.
In the Taif market, the price of a cement bag reached SR 21 and even that supply is a trickle, a market source said.
The source added that the situation would lead to unexpected delays in the completion of a number of projects despite the Ministry of Commerce and Industry’s assurance that it is in total control of the situation, especially after last year’s crisis, which required intervention to bring down the price.
Traders and truck drivers blamed factories for not releasing sufficient quantities of the commodity to the market. They said the factories are now supplying only one full load for each truck in a week, while in the past they used to release three or four loads for each truck per week.
On the other hand, however, Sultan Al-Sobaie, a Saudi cement buyer, blamed truck drivers for the cement shortage. “It is the lack of effective market monitoring that prompts laborers and truck drivers to push up the price artificially,” Al-Sobaie said.
He requested authorities to take urgent steps to oversee prices and supply sufficient quantities of cement, while expressing his surprise with regards to the unexpected hike in cement prices this year.
An official of the ministry in Taif said inspectors have been monitoring markets since the problem began two weeks ago.
The crisis appeared in the Yanbu cement market three days ago, despite the fact that market was full of cement some days ago. These days a large number of empty trucks are queuing up in front of the local cement company waiting for deliveries. Truck drivers, who demand SR 15 for a bag instead of the permitted SR 14, say they want a higher price because their trucks have been waiting for five days to get a load of the commodity. A driver said if he supplied a load of 500 bags in Makkah or Jeddah he would profit SR 4,000 while he would only earn a profit of SR 2,500 if he sold the cement in Yanbu.
An official at the Commerce and Industry Ministry’s branch in Yanbu said his office did not receive a reply to the letter it sent to the cement factory in the city, demanding an explanation for why trucks are waiting for days before receiving the cement load.

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