Saudi cement sales see annual gains

Saudi cement sales for the month of February 2015 were 6.5 per cent higher than in February 2013 and 9.7 per cent higher than February 2014 when the market was impacted by a labour shortage caused by a government immigration crackdown, according to new research from NCB Capital.

Sales were 3.3 per cent lower than in January 2015, but this was due to the shorter working month.

NCB Capital said the increase was led by smaller players in the market like Najran Cement and Aljouf, who are continuing to sell at discounts in the busy Western and Central regions.

"We believe larger players have also started offering discounts, however, at different magnitudes."

The increased sales meant that clinker stocks, which were at record highs as firms had started to stockpile, fell for the second month in a row to 20.4t.

Yanbu Cement has just published 1Q15 results which revealed a 12.5 per cent fall in net profit to US$55.2m, which has been attributed to lower-than-expected selling prices. "We believe the company began offering discounts as inventory reached all-time highs due to a continued slowdown in demand," NCB Capital said. "Selling prices could have been as low as SAR230/t. This compares to our estimates of SAR248/t, 1Q14 of SAR250/t and 4Q14 of SAR242/t."