Saudi Arabia: Cement sales fell by 11% year-on-year to 11.8Mt in the first quarter of 2018 due to a continued slowdown in the construction industry. Weak demand and high inventory levels has forced cement producers to sell their cement in other parts of the country and export to other countries, according to a report by Al Rajhi Capital. The report cited Yanbu Cement's export agreement although it said that its low production costs gives the company the advantage to export at lower prices than its competitors.
Increased competition within Saudi Arabia has led to a price war. The report marked the central region as an attractive region for northern region cement companies due to the relatively bigger market. The sales market share for northern cement companies increased in the last six months. On the other hand, central region companies' market share decreased slightly during the same period.
Yanbu Cement signed a one-year agreement to export 1Mt of clinker and 0.5Mt of cement from April 2018. It is estimated that the deal with Yanbu Cement US$26.6m in extra sales revenue in 2018. Al Rajhi Capital reckoned that the cement producer would be likely to renew the export deal in 2019 as its low margins are unlikely to aid earnings.
