Concerns that ongoing fuel issues with Saudi Arabian Oil Co (Aramco) will delay increases in domestic cement capacity are being allayed by an Aramco representative.
Okaz newspaper reported an unidentified Aramco official as saying that the company is providing enough oil and natural gas to cement companies for them to raise production by 16 per cent from current levels,
A recent report by NCB Capital had said ongoing fuel issues with Aramco could delay the 4.5Mta of new capacity expected in 2012. The new report, analysing the Saudi cement sector, noted that there are concerns on supply due to an apparent inability by Yanbu and Southern Cement to receive increased quantities of subsidised fuel from Aramco for their new lines, leading to potential delays in the start of their operations. “If this is the case, this would lead to a strong pricing support in 2012,” said Farouk Miah, acting Head of Equity Research at NCB Capital.
“The potential demand-supply imbalance could become particularly acute in the western region where demand is expected to be high, coupled with possible supply constraints at Yanbu Cement where its new 3Mta line is expected to start commercial production in 1Q12,” the report noted.
