Saudi Arabia's cement sector witnessed a 11 per cent growth in material demand for the first five months of 2020 compared to the same period last year despite the lockdown due to Covid-19 pandemic, according to Al Rajhi Capital, a leading financial services provider in the kingdom.
With leading players Qassim Cement and Yanbu Cement reporting the highest y-o-y growth of 21 per cent and 18 per cent respectively for a combined period of April and May, the volumes are likely to grow 10 per cent over the same period last year, said a report.
After including Al Rajhi Capital's estimate for June, the first half volumes are likely to grow 10% from last year. However, q-o-q cement volumes have declined by almost 50% (comparable for the first two months of Q1 and Q2 2020), it stated.
The Saudi financial service group pointed out that this was in-line with its earlier estimates.
The kingdom's other major companies - Saudi Cement and Arabian Cement - however had performed very badly, reporting a -4% and -2% y-o-y growth for the similar period.
Going forward, Al Rajhi Capital said it expects the reopening of the economy will further boost the cement demand in the country as construction projects and mortgages would pick-up, although gradually.
"We estimate that for the next couple of years, the industry would witness moderate volume growth of around 4% to 5% (prior estimate 6-7% growth)," the Saudi group stated in its review.
"The sector would continue to face certain headwinds such as lower government spending as well as slow recovery process from Covid-19 as the number of new cases is still on a rising trend; however, tailwinds such as robust mortgage growth (already clocked more than 50% of 2019 disbursements in the first four months of 2020) would encourage increased construction, thereby, would support cement demand," it added.-TradeArabia News Service
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