First eight months sales fall 18% YoY in Saudi Arabia

In the first eight months of 2017, cement sales volume In Saudi Arabia declined 18 per cent YoY to 32.1Mt, while clinker production fell 10 per cent YoY during the same period, reports analysts Al Rajhi Capital.

Northern Cement (-47 per cent YoY), Najran cement (-45 per cent) and Hail Cement (-38 per cent) witnessed the steepest YoY decline in terms of cement dispatches during the same period. City, Qassim, Yanbu and Al Safwa Cement improved their results by 1.7 per cent YoY 0.9 per cent, 0.8 per cent and 0.5 per cent, respectively during the first eight months of 2017.

New entrants, United Cement and Umm al Qura, gained 3.5 and 2.4 per cent, respectively market share during the same period. Saudi and Southern Cement saw a YoY decline in their market share by 2.6 and 2.2 per cent, respectively during the same period.

On the inventory side, Saudi (5Mt), Yamama (4.4Mt), Yanbu (3.8Mt) and Najran (3.1Mt) cement hold 47 per cent of the total inventory (34.5Mt) in the sector.

August sales
While Saudi Arabia’s cement sector continued to remain under pressure with total cement sales volume declining 16 per cent YoY to 3.7Mt in August, the combined sales volume increased for the second consecutive month, up 6.6 per cent in August as the activities have picked up post Ramadan and Eid-al Fitr seasons, said Al Rajhi Capital.

Clinker and cement production in the kingdom declined by 3.2 per cent YoY and 12.4 per cent YoY, respectively in August. Najran (-53 per cent YoY), Saudi Cement (-34 per cent) and Riyadh Cement (-34 per cent) reported the sharpest decline in terms of sales volume in August, whereas Qassim Cement (three per cent YoY) was the only producer to witness an improvement in its August dispatches.

Exports
Despite a 50 per cent reduction in export fees (from an earlier range of SAR85 (US$22.65)-SAR133, Saudi producers did not export cement in August, owing to unfavourable economics. Northern Region Cement has a licence to export for a year.