RIYADH: Saudi Arabia’s cement sector has recorded a weak performance as rising production costs coupled with low demand led to a fall in sales and production in the month of April which coincided with Ramadan.
According to data compiled by Al-Yamama Cement, sales of 17 Saudi cement factories fell by 39 percent to 3 million tons in April 2022 from 4.97 million tons in March.
This compared to a drop of 28 percent in April last year, which included three weeks of Ramadan, compared to 30 days this year.
City Cement, Qassim, Al Safwa, Najran and Al Yamama reported the highest drop month-on-month in April by 57 percent, 46 percent, 46 percent, and 45 percent respectively. A comparison in cement production and sales in Saudi firms between the first four months of 2022 and 2021 reveal an overall 14 percent negative growth in production and 12 percent negative growth in sales.
This compares to a rise by 10.9 percent and 13.5 percent in production and sales respectively in the first four months of 2021 versus the same period of 2020.
Al Yamama Cement is the only company that recorded a year-on-year growth in the first four months of 2022. Data shows a 49 percent increase in production to 2.4 million tons, and 54 percent surge in local sales to 2.4 million tons.
Safwa and Al Tabuk cement factories reported negative production growth during the same period but rose in sales by 1.3 percent and 13 percent respectively.
Al Yamama Cement had the highest share in the overall output and sales in the first four months of this year at 14 percent, followed by Saudi Cement and Southern Cement, both 11 percent.
In addition to the rising energy prices that represent about 30 to 40 percent of the total production cost, the Kingdom’s cement sector was hit by a slowdown in construction activities due to a labor shortage caused by a travel ban following the COVID-19 outbreak.
Clinker production by all Saudi companies in the first four months of 2022 increased by 8.5 percent to 18.8 million tons, with Najran Cement alone increasing its production by 98 percent, followed by Yanbu Cement by 60 percent.
Riyadh Cement and Al Jouf came last and reported a slower clinker production of 42 percent and 30 percent respectively.
Saudi cement factories sell almost all of the cement produced locally. The Saudi Cement Co., however, emerged as the top exporter by exporting 199,000 tons, which represents almost 60 percent of total cement exported by all the factories in the Kingdom.
In terms of clinker exports, Yanbu Cement, Saudi Cement and Arabian cement made up 75 percent or 1.9 million tons of the total in the first four months of 2022.
Cement in-stock in April 2022 increased by 7.3 percent year-on-year versus 8.9 percent in the previous month of March. This also compares to year-on-year decreases in April and March of 2021 of 11.8 percent and 15.1 percent respectively.
Qassim Cement and Northern Region cement had the highest rise in cement stocks in April 2022 by 69 percent and 51 percent respectively.
According to Al Jazira Capital analysts, the number of expatriate workers in the labor market had a net yearly decline of 66,000 workers in 2021. However, the latest data shows a quarterly net rise of 267,000 expats during the fourth quarter in 2021, the first quarterly rise since the same period in 2020.
A surge in construction activities due to The Red Sea Development Co., AMAALA and other development projects in Saudi Arabia such as NEOM and Qiddiya are also expected to drive the recovery of the local cement industry.
Cement manufacturers are investing in new infrastructure to enhance production efficiency and reduce power consumption. This shift also comes as Saudi Arabia joins more than 100 countries that have committed to achieve net-zero emissions by 2060.