Cement crisis recurs in Eastern Region

Cement crisis recurs in Eastern Region
Updated 23 May 2013

Cement crisis recurs in Eastern Region

Cement crisis recurs in Eastern Region

The cement crisis is reappearing in the Eastern Region as a number of distributors are increasing their prices to consumers by up to 25 percent with a normal bag sold at SR 20 and a solid one at SR 21.
The Ministry of Trade recently issued regulations specifying the price of cement at SR 12 for the ordinary and SR 13 for the solid. The ministry is obligating factories in the country to work at full capacity to cover the market and ensure additional supplies for the areas that need cement.
Vice President of the Contractors Committee in the Eastern Chamber Khaliefah Al-Dabeeb says one of the reasons for the cement crisis is the demand for cement from the mega projects in Saudi Arabia, and this is creating a problem in supply and demand.
He added that the biggest problem in this crisis is the greed of the intermediaries and the willingness of the factories to sell cement to anyone, local or foreign, which always lead to the fluctuation in prices and called on the Ministry of Commerce and Industry to play a bigger role to stop what is happening, especially since the situation is getting out of control.
Experts say because of this, clinker deposits, the principal material which goes into cement, went down by 30 percent last January in comparison with the same month in 2011.
The distributors say they are not responsible for the shortages and are facing price increases from the factories because of the rising transport costs, which is leading to hikes as they can compensate for the losses they are incurring.
Ahmad Al-Zayed, one of the distributors in Al-Aziziyah in Alkohbar, which is witnessing increased building activity, says their profit is not more than SR 2 per bag and they don’t exploit the cement demand by raising prices as some suggest.
As a result of this recurring crisis, many people started hoarding big amounts of cement in fear of price increases, especially those who have mega projects, despite the fact that there are risks in such actions such as damage to cement because of the weather, especially in the Eastern Region.
Custodian of the Two Holy Mosques King Abdullah issued a directive in April calling for a solution to the demand increase for this material by importing 10 million tons for construction and to build 3 to 4 new factories with an annual production capacity of 12 million and to earmark SR 3 billion to support the sector for the next three years.
Saudi Arabia registered in the last four years a big increase in the demand for cement, between 8 percent and 12 percent per year.