2013-01-26 05:56:37 - Saudi Arabian cement demand is expected to increase 9.4 percent per year to over 80
million tons by 2017 as massive infrastructure projects create surging demand. Virtually all
regions of the country will post gains, with large new cement production capacities coming online
in the next few years. These and other trends are presented in the “2013 CW Group Saudi
Arabia Market Update report,” a new study from CW Group, the leading global cement industry
consultancy and research house based out of New York, USA.
Saudi Arabian cement demand is expected to increase 9.4 percent per year to over 80 million tons by 2017 as massive infrastructure projects create surging demand. Virtually all
regions of the country will post gains, with large new cement production capacities coming online in the next few years. These and other trends are presented in the “2013 CW Group Saudi
Arabia Market Update report a new study from CW Group, the leading global cement industry consultancy and research house based out of New York, USA.
The country’s Ninth Development Plan 2010 – 2014 includes provisions for massive governmental investments, driving the construction share of GDP to an estimated 5.9 percent
by the end of 2014. But the report cautions: “a unique set of coinciding
mega-forces have converged to create this benign scenario, which may not be sustainable (from Arab Spring-
motivated investments, industrial policy, unique ownership arrangements, energy subsidies,etc�.
In 2005, cement demand in the Kingdom of Saudi Arabia reached less than 25 million tons. Since then the market has expanded by double digits, closing 2012 at over 53 million tons in
cement consumption. The recently published “2013 CW Group Saudi Arabia Market Update report” sees cement industry embarking into a “Golden Era” with strong growth in cement
consumption, subsidized energy prices, and limited foreign competition. By the end of 2017, cement demand is projected to be 30 million tons higher than today. “Admittedly, our 2017
demand number is aggressive, but the government’s resolution to spend its way to social harmony in the Kingdom is proven and should not be underestimated. We expect more projects
to be announced together with expansion of existing projects the CW Group analysts predicted. But the industry is not without its concerns: a surge in cement prices has prompted
caps on cement prices and the Saudi Ministry of Commerce to reinstate an export ban for both cement and clinker.
As new cement manufacturing capacity comes on-line, the fight for additional subsidized energy supplies is also raging between cement companies and the national energy provider,
ARAMCO. The fuel issue is likely to intensify, as by the end of 2012 all cement companies operating in the Kingdom had announced expansion plans.
More than 25 million tons in new cement capacity has been announced to be commissioned by the end of 2017 with the bulk of the production lines scheduled to come on stream in 2014
and 2015. Yamama Cement and Eastern Province Cement have to date announced the most ambitious projects, each planning to add 3.5 million tons per year. From a regional perspective,
the cement capacity breakdown is not seen to shift the profile materially; the Center region will hold the leading position while strengthening its regional footprint by 0.5 percentage point in the
next five years.
The CW Group analysts note that the implications stretch beyond the borders of the Kingdom: “these production capacity raise a loud alarm bell for cement producers in neighboring
markets if the export ban is lifted and energy subsidies continue. Saudi Arabia will be the contender in this region and be a very strong competitor for regional export markets if it
develops the logistics, marketing and distribution capabilities
The “2013 CW Group Saudi Arabia Market Update report” (published 12/2012, 48 pages) is available for $2,975 from the CW Group. For further detail contact firstname.lastname@example.org
, or visit
our website at www.cwgrp.com/research-a-analysis/research-reports/306061-saudic ..
for a complete table of contents, including a competitive
dynamics analysis enriched with a SWOT perspective, complemented by cement consumption and nameplate capacity projections up to 2017.