JEDDAH, 21 April 2005 — Prices of cement and other construction materials have been on the rise lately.

A sack of cement went up to SR16 as opposed to the regular SR12 to SR14 price range due to an increase in demand with all the construction projects around the country.

Similarly, the price of plumbing materials is up by 35 percent, plastic materials by 30 percent and paint by between 5 percent and 10 percent.

Wood prices have also gone up, the range depending on the type. Reasons are attributed to the increase in oil prices, shipping expenses and currency rate exchange which are all factored into the price of imported materials. However, cement is produced by national companies and the increase in its price is contributed to the natural law of market supply and demand.

“We have no role in the increase of cement prices. We deliver the cement at the factories and sell it to the customers when they come to load up their trucks for SR11.25 a sack, which is less than the standard price set by the Ministry of Commerce of SR12, and all cement companies sell it for less than that price,” said Mahmoud Al-Harbi, sales director at Arabian Cement Company.

“It is the cement merchant who then sell it to the construction companies and contractors at a high price when there is an increase in demand as is the case now,” said Al-Harbi.

However, he says that this increase is typical at this time of year. “Every year there is this increase from the end of Haj until the start of summer vacation,” he said.

The increase in the prices of cement and other construction materials is causing financial distress to many of the contractors especially those who did not factor in the changes in prices for their cost estimations. Some are forced to fulfill their bidding contracts even at a loss while others try to renegotiate their contracts or arrange for compensation. Most of those negatively affected by the price increase are small contractors and small construction projects because the larger companies buy in bulk.

There are eight cement companies in Saudi Arabia and even though they produce at full capacity and sell an extra percentage from the stored supply when there is an increase in demand they still can’t cover the market demand, explained Al-Harbi.

The Ministry of Commerce has recently licensed seven more cement manufacturing factories in Riyadh, Jeddah, Dammam, Hail and Badr.