While the latest data of the Saudi cement market has provided some reassurance in terms of the sector’s recovery, the reality on the ground urges more caution going forward as spending on megaprojects is only gradually picking up. However, there are positive signs such as emerging export opportunities and improving cement prices. By Pritish K Devassy, Al-Rajhi Capital Research, Saudi Arabia.
Following a decline in annual cement sales volumes over the last few years, the recovery in Saudi cement sector revenues since the start of 2019 may, at first glance, appear reassuring. However, a closer look at recent data from the ground shows that the pick-up in demand has been gradual and domestic construction activity continues to be subdued as the awarding and implementation of new projects remains weak. Al-Rajhi Capital believes that the total capital expenditure levels are lower as compared to the 2010-14 period when strong cement demand growth was led by a series of big-ticket projects.
