Cement prices down 40%, spur construction market

The real estate sector in the Kingdom, which was passing through a crisis of sorts in the past few months, has begun looking up with cement prices in local markets dropping by as much as 40 percent. This has had a positive impact on the sector with activity in real estate development and residential construction picking up, local media quoting dealers said.
The price of cement bag has fallen from SR25 to SR16 in the western, southern and northern regions, and SR 18 and SR 13 in the central and eastern regions respectively.
Abdullah Al-Maliki, a property expert, said the Kingdom has been witnessing active and substantial development in housing construction due to availability of building material, particularly cement, which comes as encouragement to citizens to build their homes in these days.
He said some real estate developers who had suspended construction activity in the first half of the current year due to the cement crisis have now begun implementing their housing projects.
Meanwhile, truck owners in Riyadh attributed the decline in cement prices to weak demand and increased supplies supported by huge cement imports from other countries. They predicted that prices will go down to SR 12.75 per bag or as low as SR12.50, as prices normally drop with the advent of Haj season.
Abdullah bin Fahad, a truck owner, said 30 to 50 trucks each carrying at least 600 cement bags of various types such as Bahraini, Yamama, Riyadh as also imported cement were entering the market on a daily basis.
“Sometimes, the waiting period for trucks to offload their cargo at distribution centers runs to more than three days,” he said.
He said the price of Bahraini cement fell from SR18 to SR13.75 per bag, while Yamama and Riyadh cement dropped from SR 17 to SR 13 per bag and sometimes to SR12.75.
Contractor Abdullah bin Awad, quoting statistics, said one million tons of imported cement was available in the local market, and this has contributed largely to meet the growing demand for cement following the large number of construction projects taken up in various regions of the Kingdom.
He expected that the execution of mega projects like the economic cities, airports, expansion works at holy cities, besides other projects in the private sector and at the individual level will increase the demand for cement dramatically after the Haj season.
Dealers in the cement market say the volume of demand for cement in Makkah region alone accounted for one-third of the production in the Kingdom.
Production capacity of cement factories in the Kingdom is estimated at 60 million tons, and it is expected to go up to 70 million tons with new factories coming up.