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Saudi sees slowdown in cement demand growth

Although total cement and clinker sales volumes in Saudi Arabia increased by 22.6 per cent year-on-year in March 2010, this was the lowest growth in four months indicating a slowdown in demand for cement, according to a report.

However, inventory as a percentage of monthly sales continues to fall, reaching 226 per cent for the same period, it said.

"Cement and clinker sales including exports for March stood at 4.24 million tonnes, reporting an increase of 22.6 per cent yoy. Additionally, sales increased 17.4 per cent month-on-month compared to 3.62 million tonnes in February," said the Saudi Arabia Cement Sector Report from NCB Capital.

Cement exports stood at 107,000 tonnes in March, up 68.8 per cent yoy. However, on a mom basis, cement exports declined 17.7 per cent from 130,000 tonnes in February this year.

In March, production increased 17.2 per cent MoM to 4.05 million tonnes. Additionally, clinker production increased 11.3 per cent to 3.17 million tonnes, up 11.3 per cent in February.

Clinker stock as a percentage of cement sales declined to 226 per cent from 278 per cent in February and the high of 481 per cent in September 2009.

Saudi Arabia has 12 cement companies with an estimated annual cement production capacity of 48 million tonnes. In March, total cement sales in the country stood at 3.96 million tonnes versus 3.41 million tonnes in February and 3.33 million tonnes in March 2009.

Clinker sales in March stood at 104,000 tonnes compared to 22,000 tonnes in February and 54,000 tonnes in March 2009. In March, cement and clinker exports stood at 107,000 tonnes and 73,000 tonnes respectively. Four companies exported cement during the month - Saudi Cement, Eastern Province Cement, Northern Region Cement and Tabuk Cement.

In March, cement and clinker sales in Saudi Arabia were up 20.1 per cent YoY to 4.06 million tonnes compared to 3.38 million tonnes in March 2009. Sales grew 18.3 per cent compared to 3.44 million tonnes in February this year.

The majority of companies reported their highest absolute sales volumes YTD this March. Saudi Cement reported the highest growth in domestic sales on YoY basis at 48 per cent, while Tabuk cement reported highest growth in sales on MoM basis at 26 per cent.

The kingdom's cement exports declined to 107,000 tonnes in March compared to 130,000 tonnes in February although higher than the 77,000 tonnes in March 2009. Clinker exports increased to 73,000 tonnes in March compared to 49,000 tonnes in February.

Companies did not export clinker at all in March 2009.

In March, Saudi Cement, Eastern Province Cement, Northern Region Cement and Tabuk Cement exported cement. Saudi Cement exports decreased to 65,000 tonnes in March this year against 72,000 tonnes in February. Northern Region Cements continues to remain the only exporter of clinker in Saudi Arabia and exported 73,000 tonnes of clinker during the month compared to 49,000 tonnes in February.

Saudi Arabia produced 4.05 million tonnes of cement this March, up 22.6 per cent yoy and 17.2 per cent mom from 3.46 million tonnes in February.

Clinker production increased 11.3 per cent on MoM basis, while it declined 6.1 per cent on YoY basis.

All the companies except Northern Cement reported increase in cement production on MoM basis. From the listed companies, Yanbu reported the highest decline in clinker production on YoY basis, down seven per cent.

Clinker stock at the manufacturer level decreased for the third consecutive month by 6.6 per cent MoM to 9.18 million tonnes, as a result of a decline in clinker roduction. On the other hand, on a YoY basis, clinker stock increased by 8.4 per cent. Cement stock declined by 20.4 per cent on YoY and increased marginally by 1.1 per cent on MoM basis.

Clinker stock as a percentage of sales decreased to 226 per cent compared to 278 per cent in February.

Company wise, Qassim Cement continues to hold the lowest clinker stock at 47 per cent as a percentage of March sales.

On the other hand, among the listed companies, Southern Cement continued as holder of the highest clinker stock percentage at 434 per cent of March sales compared to 500 per cent in February.

In March, six companies lost domestic market share to six companies. Najran Cement was the biggest gainer of the month increasing its share by 0.7 per cent.

On the other hand, Qassim Cement, another player in the western region, was the biggest loser of the month with market share falling by 0.7 per cent.

By Staff Writer

© Emirates Business 24/7 2010