Saudi Arabia cement companies see sales and production fall 10%

Sales of cement by Saudi Arabian companies declined by 9.93 per cent YoY in August, while production dropped by 10.4 per cent, Mubasher reports.

Output for August was 4.3Mt, while deliveries were 4.4Mt. The fall in sales was unevenly distributed, with some companies – notably Riyadh Cement and City Cement – seeing double-digit increases. Of the bigger players, Saudi Cement escaped the worst, with its sales falling by 1.5 per cent, while Yanbu fared particularly poorly, with sales dropping by 13.7 per cent.

Smaller producers had a more volatile time of it. Tabuk Cement saw sales jump by over 30 per cent YoY, while Northern Cement recorded a fall of 42.6 per cent compared to its performance last August.

Slowing sales have led to an increase in firms’ clinker stockpiles, which stand 12 per cent higher in August 2016 than they did a year ago. Some companies are now holding considerable stocks, with Saudi Cement, Yamama Cement and Yanbu cement each holding more than 3.5Mt apiece.

Due to the fall in production, stocks of finished cement fell slightly (by three per cent), but as firms tend to hold much less of this than they do clinker, the impact is likely to be muted. In August 2016 Saudi firms held stocks of over 25Mt of clinker compared to just over 1Mt of finished cement.

Mubasher reports that the profits of listed Saudi Arabian cement firms fell by 13.9 per cent in the first six months of 2016 as compared to the same period a year earlier, totalling SAR1.3bn (US$773m). There was an even sharper fall for Q2 2016, with profits down by 21.2 per cent to SAR1.3bn.