The cement market in the Kingdom is witnessing a decline in demand to its lowest level following suspension of several construction projects on account of the Haj season.

Abdullah Radwan, head of the contractors committee of the Jeddah Chamber of Commerce and Industry (JCCI), said supply surpassed demand for cement by eight percent, dropping to 9.96 million tons during the past few months. Domestic production of cement averages about 350,000 tons.

Cement prices fell sharply in the local market following the announcement to import ten million tons to meet market demand, with prices dropping to SR14 per bag, down 15 percent, he said.

Truck drivers used to control cement prices, charging SR20 per ton, or about SR600 per truck-load, while cement transport fees were raised for Al-Jouf and Arar factories to SR40 or SR1,200 per truck-load, Radwan said.

Mohammed Al-Angari, chairman of the Al-Anqari Holding Company, said his company usually witnesses drop in demand for cement during the Haj season.

“Otherwise, demand in recent months witnessed a huge increase following implementation of several mega government projects in many parts of the Kingdom, including real estate development projects in Makkah, the expansion of Jeddah and Riyadh airports and the introduction of train lines in the Central and Western regions,” he said.

He admitted that a black market did exist but that it was limited and mostly practiced in remote areas.

A bag is sold at SR25 on average in these areas. He attributed the rise in prices to the high cost of transportation and diesel fuel.

Abdul-Aziz Hanafi, former chairman of the contractors committee at the JCCI, said the cement industry was experiencing rapid growth, with production touching 69.9 million tons.

The Saudi real estate market is witnessing a housing crisis with the need to build two million housing units by 2015 to meet growing demand, Hanafi said. He expected public and private real estate development companies to build 275,000 units per year.